Q3 2025 Brandywine Realty Trust Earnings Call

Operator: Thank you for standing by and welcome to the Brandywine Realty Trust Third Quarter 2025 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Gerard Sweeney, President and CEO. Please go ahead, sir.

Gerard Sweeney: Jonathan, thank you very much. Good morning, everyone. Thank you for participating in our Third Quarter 2025 Earnings Call. As usual, on today's call with me are George Johnstone, our Executive Vice President of Operations; Dan Palazzo, our Senior Vice President and Chief Accounting Officer; and Thomas Wirth, our Chief Financial Officer. Prior to beginning, certain information discussed on the call today may constitute forward-looking statements within the meaning of the 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.

Thank you for standing by and welcome to the Brandywine Realty. Trust third quarter 2025 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session to ask a question during this session. You'll need to press star 1, 1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue simply press star 1 1 again, as a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program. Jerry's, we need president and CEO, please go ahead, sir.

Jonathan, thank you very much. Uh, good morning everyone.

Thank you for participating in our third quarter, 25 Earnest call. As usual on today's call with me, or George Johnstone, or Executive Vice President of Operations. Dan Palazo our senior Vice President, Chief accounting officer and Tom, worth our Executive Vice President and Chief Financial Officer.

Gerard Sweeney: During our prepared comments today, we'll briefly review third quarter results, provide updates on our 2025 business plan, and be prepared to answer any questions you may have. Looking at the third quarter, we posted solid operating metrics again, reinforcing the continued quality and our strong market positioning. As we'll review in more detail, we do anticipate performing within all of our business plan ranges. At the midpoint, we have now executed over 99% of our spec revenue target. Our quarterly tenant retention rate was 68%, and we expect to end the year at the upper end of our range. Leasing activity for the quarter approximated 343,000 square feet, including 164,000 in our wholly owned portfolio and 179,000 in our joint ventures. Forward leasing commenced after the quarter end remains strong at 182,000 square feet, with most of those leases taking occupancy in the next two quarters.

Uh, prior to beginning certain information, discussed on the call today May constitute for looking statements within the meaning of the 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 filed with the SEC. So during our prepared comments, there will briefly review third quarter results, provide updates on our 25 business plan and be prepared to answer any questions you may have,

Uh, looking at the third quarter, we posted solid operating metrics again.

Reinforcing the continued flight, the quality, and our strong Market positioning as we're reviewing more detail. We do anticipate performing within all of our business plan ranges,

At the midpoint we have now executed over 99% of our spec Revenue Target.

Our quarterly tenant retention rate with 68% and we expect to end the year at the upper end of our range. Leasing activity for the quarter. Approximated 343,000 square feet including 164,000, in our wholly owned portfolio and 179,000 in our joint ventures.

Gerard Sweeney: Third quarter net absorption totaled 21,000 square feet. As anticipated in our business plan, we ended the quarter at 88.8% occupied and 90.4% leased. In Philadelphia, we're 94% occupied and 96% leased. In the Pennsylvania suburbs, we're at 88% occupied and 89% leased, with a solid pipeline of prospects for the existing vacancies. Boston remains at 77% occupied and 78% leased. We do, as we forecasted before, have a large known move-out in the fourth quarter that will drop this region further to about 74% by year-end. Looking ahead, we have only 4.9% of annual rollover through 2026, which is among the lowest in the office sector, and only 7.6% through 2027. For the quarter, our mark-to-market was a negative 1.8% on a GAAP basis and a negative 4.8% on a cash basis.

For releasing commenced after uh the quarter end remains strong at 182,000 square feet with most of those leases taking occupancy in the next 2 quarters.

Third quarter net absorption total: 21,000 square feet.

And is anticipated in our business plan. We ended the quarter at 88.8% occupied and 90.4% least.

In Philadelphia. We're 94% occupied and 96% least in the Pennsylvania suburbs. We're at 88% occupied in 89% least with a solid pipeline of prospects for the existing vacancies.

Boston remains 77% occupied in 78% least, we do as we forecast it before, a large known move out in the fourth quarter that will drop this region further in, in to about 74% by year end.

looking ahead, we have only 4.9% of annual rollover through 26 and 1 of the low, which is among the lowest in the office sector and only 7.6% through 27,

Gerard Sweeney: Both of those metrics, however, were heavily influenced by a large as-is renewal in Austin that had a negative 16% GAAP and negative 18% cash, but no TIs were invested. Without that lease, the company would have been a 6.2% positive GAAP and 2.8% positive cash. By way of example, our CBD in Pennsylvania mark-to-market were positive at 6.7% and 3.1% on a GAAP and cash basis, respectively. Our capital ratio was 10.9%, slightly above our 2Q5-business plan range. Based on leases already executed for the fourth quarter, we're maintaining our capital ratio range of 9% to 10%, which is the lowest capital ratio range we've had in over five years. Tour activity through the portfolio continues to accelerate. Third quarter physical tours were in line with second quarter, but more importantly, the square footage of those tours in Q3 exceeded the second quarter by 23%.

For the quarter, our mark-to-market was a negative 1.8% on a gap basis and a negative 4.8% on a cash basis. Both of those metrics that were were heavily influenced by a large Asus renewal in Austin, that had a negative, a 16% Gap in negative 18% cash, but no TI's were invested.

Without that lease, the company would have been a 6.2% positive gap and a 2.8% positive cash.

Uh, by way, of example, our CBD in Pennsylvania, Mark to Market were positive at 6.7% and 3.1% on a gap in cash basis respectively.

Our Capital ratio was 10.9% slightly above our 25, business plan range, but based on leases already, executed for the fourth quarter for maintaining, our Capital ratio range of 9 to 10%, which is the lowest capital ratio range, we've had in over 5 years.

Tour activity through the portfolio, continues to accelerate.

Gerard Sweeney: Another positive sign is that as we track our deal status, letters of intent, legal negotiations, and out for signature is up 170,000 square feet, or 25% from Q2 levels. For the quarter, 51% of all new leases were the result of a flight to quality. We do not have any tenant lease expirations greater than 1% of revenues through 2026. Our operating portfolio leasing pipeline remains solid at 1.7 million square feet, which includes about 72,000 square feet in advanced stages of negotiations. To sum up, Operations 25 is characterized by continued strong operating performance, supported by limited rollover risk, excellent capital control, the ongoing strengthening of our marketplaces, and an expanding leasing pipeline. Looking at our balance sheet and liquidity, we remain in excellent shape, with no outstanding balance in our $600 million line of credit and cash on hand at the end of the quarter.

Exceeded the second quarter by 23%.

In other positive sign is that as we track our deal. Status letters of intent, legal negotiations, out for Signature, is up, 170,000 square feet or 25% from Q2 levels.

For the quarter 51% of all new leases were the result of a flight to Quality. We do not have any tenant lease expirations greater than 1% of revenues through 202026.

Our operating portfolio leasing pipeline remains solid at 1.7 million square feet which includes about 72,000 square feet in advanced stages of negotiations.

To sum up operations. 25 is characterized by continued strong operating performance supported by limited rollover risk. Excellent, Capital control the ongoing strengthening of our marketplaces and an expanding leasing pipeline.

Gerard Sweeney: As previously disclosed, we recently issued $300 million of bonds due January of 2031, which generated $296 million of gross proceeds and an effective yield of 6.125%. We used $245 million of those proceeds to repay our secured CMBS loan that was due in February of 2028. That term loan payment leaves us fully unencumbered on our operating portfolio, which provides much greater flexibility to lease and manage our assets, and then also brought about $45 million into our unencumbered NOI pool. We have no unsecured bonds maturing until November of 2027. To ensure ample liquidity, we do plan to maintain minimal balances on our line of credit. As noted previously, our overall business plan is still designed to return us to investment-grade metrics over the next several years. As such, we will continue looking to reduce overall levels of leverage.

Looking at our balance sheet and liquidity, we remain in excellent shape with no outstanding balance. In our, 600 million dollar line of credit and cash on hand at the end of the quarter,

Uh, as previously, the scope disclosed, uh, we recently issued million dollars of bonds, due January of 2031, which generated 296 million of gross proceeds, and it effective yield of 6 and an eighth. We use 245 million of those proceeds to repay our sec.

George CNBS loan, which was due on February 28th.

At Term Loan, payment leaves us fully encumbered on our operating portfolio, which provides much greater flexibility to lease and manage our assets. And then also bought about 45 million dollars, uh, into our unencumbered, noi pool.

We have no unsecured bonds maturing until November of 27. And to ensure ample liquidity, we do plan to maintain minimal balances on our line of credit.

Gerard Sweeney: As a point of reference on that, our average cost of bond debt is slightly north of 6%, but we do have $900 million, or about 50% of our outstanding bonds, with coupons north of 8%, which, assuming capital markets remain constructive, provide very good refinancing opportunities for us over the next several years. Looking at the markets from an overall standpoint, the real estate markets and overall sentiment continue to improve. That perspective is supported by the following fact patterns. Our pipeline activity continues to grow. Tour volume remains at very healthy levels. Rent levels and concession packages remain very much in line with our business plan. In select submarkets and buildings, we continue to push both nominal and effective rents. All of our 2025 key operating goals have been achieved. The demand for high-quality, highly amenitized buildings remains a strong consumer preference.

As noted previously, our overall business plan is still designed to return us to investment grade metrics over the next several years. As such we will continue, looking to reduce overall levels of Leverage and as a point of reference on that our average cost to bond that is Slightly North of 6% but we do have 900 million dollars or about 50% of our outstanding bonds With Coupons north of 8% which assuming Capital markets remain constructive provide, very good refin refinancing opportunities for us over the next several years.

Uh, looking at the markets from an over, look from an overall standpoint, the real estate markets and overall sentiment continued to improve that perspective is supported by. The following fact, patterns, our pipeline activity continues to grow tour, volume remains at very healthy levels.

Rent levels, and Concession packages remain very much in line with our business plan and in select, sub-markets, and buildings. We continue to push both nominal and effective rents.

And all of our TW 2025 key operating goals have been achieved.

Gerard Sweeney: In Philadelphia CBD, as I noted on previous calls, market vacancy remains concentrated in a small number of buildings, and high-quality buildings continue to outperform lower quality while pushing effective rents. Our competitive set continues to narrow through buildings being removed from inventory for conversion and several select assets still having financial issues, which essentially removes them from the leasing market. In fact, as an update from last quarter, our numbers now show that potentially 11 buildings totaling 5.1 million square feet of office are in the process of being removed from inventory for conversion to residential uses. As a frame of reference, that's about an 11% reduction in the overall office inventory in CBD Philadelphia. With no construction on the horizon, our quality assets remain in an ever-improving competitive position.

The demand for high quality, highly amenitiz, buildings remains a strong consumer preference, uh, in Philadelphia CBD. As I noted on previous calls Market, vacancy remains concentrated in a small number of buildings and high quality buildings. Continue to out, outperform lower quality while pushing effective rents

our competitive set continues to narrow through buildings being removed from inventory for conversion and several, select assets, still having Financial issues, which essentially moves removes them from the leasing Market. In fact, as an update from last quarter,

Our numbers now show the potentially 11 buildings totaling uh, 5.1 million square feet of office, is in the process of being removed from inventory for conversion to residential uses.

Gerard Sweeney: The city's life science sector, while still early in the recovery phase, should remain a forward growth drive, particularly with the return of capital, as that submarket is backed by a strong regional healthcare ecosystem that includes over 1,200 biotech and pharmaceutical firms, along with 15 major healthcare systems. Austin also remains in a recovery phase. Leasing activity continues to improve. As of last report, there are over 108 tenants actively seeking more than 3.5 million square feet, with the tech sector accounting for 1.5 million square feet of that demand. A bit of a resurgence from the tech company space demand standpoint. Third quarter leasing activity was 1 million square feet, which was 70% higher than in Q2. Green shoots are continuing to emerge in Austin, particularly in the higher quality product. Our FFO for the quarter was $0.16 a share, or one penny above consensus.

Uh, as a frame of reference, that's about an 11% reduction in the overall Office Inventory in CBD Philadelphia as such with no construction on the horizon, our quality assets remain in an ever-improving competitive position.

The cities like science sector while still early in the recovery phase, should remain a Ford growth driver, particularly with the return of capital as the that submarket is backed by strong Regional Healthcare ecosystem, that includes over 1200 biotech and pharmaceutical firms along with 15, major Health Care Systems.

With the tech sector accounting for 1.5 million square feet of that demand. So a bit of a Resurgence uh from the tech company. Uh, space demand standpoint third quarter, leasing activity was 1 million square feet, which was 70 plus percent higher than in Q2. So, green shoots are continuing to emerge in Austin, particularly in the higher quality product.

Gerard Sweeney: We had two operating items that Tom will amplify in more detail that did impact our 2025 guidance revisions. As previously announced, we will be recording in the fourth quarter an earnings charge totaling $0.07 per share related to the early prepayment of our secured notes. In addition, we did anticipate, as outlined on previous calls, making progress on recapitalizing at least one and possibly two projects of our development joint ventures in the second half of the year. We did anticipate these recapitalizations would add around $0.04 per share to the 2025 FFO. During October, we did capitalize our 3025 JFK properties as the first step in this process. We do anticipate possibly one more later this year or very early in 2026.

Our FFO for the quarter was 16 cents a share.

Or 1 Penny above consensus, we had 2 operating items that Tom will amplify more detail that did impact. Our 25 guidelines, we will be recording in the fourth quarter and earnings charge totaling 7, cents per share related to the early prepayment of our secured notes. Uh, in addition, uh we did anticipate as outlined on previous calls making progress on Rec capitalizing at least 1 impossibly 2 projects of our development joint ventures in the second half of the year. We did anticipate. These wreck capitalizations with ADD around 4 cents per share to 2025 ffo.

Gerard Sweeney: As we talked before, the objective of these recapitalizations, which includes a full retirement of the preferred equity investments, is to bring high-quality stabilized assets onto our balance sheet, which will deliver high-quality cash flow, improve earnings, reduce overall leverage, and open up additional capital options for us on those properties. Due to several factors, including the slower stabilization of several projects and slower than anticipated interest rate decreases, these recaps are occurring a quarter or two behind schedule. The full impact will not occur really until 2026. As a result of that, our revised FFO range, as we outlined in our press releases, is $0.51 to $0.53 per share. Optimizing value in these development projects remains a top priority. With 3025 JFK, Avira, and Solaris both 99% leased and stabilized, our joint venture development pipeline is really down to 1 Uptown ATX and 3151 JFK.

During October, we capitalized our $3,025 JFK property as the first step in this process. We do anticipate it possibly one more later this year or very early in 2026.

Uh, yeah, as we talked before the objective of these wreck capitalizations, which includes a full retirement of the preferred Equity Investments, is to bring high quality stabilized assets onto our balance sheet, which will deliver high quality, cash flow, improve earnings, reduce overall leverage and open up uh additional Capital options for us on those properties.

Due to several factors including the slower stabilization of several projects and slower than it's just anticipated interest rate decreases. These Recaps are occurring a quarter or 2 behind schedule as such the full impact, will not occur, really until 2026. Uh, as a result of that, you know, our revised ffo range as we outlined in our press release is 51 to 53 cents per share.

Gerard Sweeney: The leasing pipeline on these projects is up 700,000 square feet from last quarter. As you noted in the supplemental package, even with this increase, given the uncertain timing of lease executions, the time to complete tenant space plans, and the corresponding build-out timelines, we have slid the stabilization dates on both of those properties. Looking at Schuylkill Yards 3025, that commercial component is now 92% leased. We have a very good pipeline for the remaining space in the building. With leasing in place, the commercial component will stabilize in Q1 2026, immediately after our major tenant takes occupancy. Avira, as I noted a moment ago, is 99% leased and achieved full economic stabilization during the quarter. We're also experiencing on that project a very good renewal rate with average double-digit rate increases thus far this year.

Optimizing value in these development projects remains a top priority with 3025, uh, Avera and Solaris both 99% at least in stabilized. Our joint venture development pipeline is really down to 1 up 10 and 30 and 3151 JFK.

The leasing Pipeline on these projects is up. 700,000 square feet from last quarter.

But as, as you noted in the supplemental package, even with this increase, given this given the uncertain timing of lease executions. The time to complete a tenant space plans. And the and the corresponding buildout timelines, uh, we have slid, the stabilization dates on both of those properties.

Gerard Sweeney: 3151 was substantially delivered in the first quarter of this year and will be in the capitalization phase for the balance of 2025. The pipeline on this project has increased to 1.7 million square feet, broken down to 60% office prospects and 40% life science prospects. They range in size from 25,000 to 200,000 square feet. Discussions with many of these prospects are active. Tour activity remains robust, and the project has been very well received. The life science market, as I noted, remains very much in a recovery mode. It's impacted by a challenging fundraising climate and public policy uncertainty, although we are seeing increased traffic coming from that sector. Despite the strong increase in both office and life science traffic, as I noted, we did slide the stabilization date just to be conservative on when leases will actually commence.

Looking at Schuylkill yards, 3025 that commercial component is now 92% least we have a very good pipeline for for the remaining space in the building. Uh, with leasing in place, the commercial component will stabilize in q1, 26, immediately after our major tenant takes occupancy via as I noted, a moment ago, is 99 percent, at least in the chief full economic stabilization during the quarter. We're also experiencing that project, a very good renewal rate with averaged double-digit rate increases, uh, thus far this year.

3151 was substantially delivered in the first quarter of this year and will be in the capitalization phase for the balance of of 25. The pipeline on this project is increased uh to 1.7 million square feet, broken down to 60% office prospects and 40% life signs prospects. They range in size from 25,000 to 200,000 square feet.

Discussions with many of these prospects are active, tours activity remains robust, and the project has been very well received.

Gerard Sweeney: At 1 Uptown ATX, we're 40% leased but have another 15% of the project in the final stages of lease negotiations. The remaining pipeline remains strong, with tenant sizes ranging from between 4,000 to 100,000 square feet, including ongoing discussions with several full-floor users. We're also nearing completion on building out some spec space on one of the floors to accommodate the accelerated move-in for several smaller prospects. Solaris, which opened about a year ago, has achieved stabilization during this quarter, so very successful on that, with the renewal program well underway. As noted last quarter, our 2025 business plan anticipated $50 million of asset sales. We have sold $73 million of properties at an average cap rate of 6.9% and an average price per square foot of $212.

The life science Market. As I noted remains very much in a recovery mode. It's impacted by a challenging fundraising climate in public policy uncertainty. Uh, although we are seeing an increased traffic coming from that sector, despite this strong increase in both office and life science traffic. As I know that we did, Slide the stabilization date, just to be conservative on when leases will actually commence.

At Uptown ATX, we're 40% least but have another 15% of the project in the final stages of lease. Negotiations, the remaining pipeline remains strong, uh with tenants sizes. Ranging from between 4,000 to 100,000 square feet including ongoing discussions with several full-floor users

Specs based on 1 of the floors to accommodate the accelerated move in for several smaller prospects.

Solaris, which opened about a year ago, uh, has achieved stabilization during this quarter? So very successful in that with the renewal program, well underway,

uh,

Gerard Sweeney: At this time, we're obviously not factoring any more sales closings during 2025, but we'll certainly identify a target as part of our 2026 guidance. In general, though, from what we're seeing, the investment market continues to improve both in terms of velocity and pricing. The pricing increase is notable because many asset trades are still on lower quality or underleased assets. For example, over the last 12 months, there have been about $475 million of sales in suburban Austin at prices per square foot ranging from $75 to $470 per square foot, an average occupancy of 67%, and cap rates ranging from the low single digits to upward of 12%. Likewise, in the PA suburbs, there were $242 million of sales at cap rates that range from 7% to 11% and an average occupancy of 85%.

as noted last quarter or 25 business plan anticipated, 50 million dollars of asset sales. Uh, we we have sold 73 million of properties at an average cap rate of 6.9% uh, in an average price per square foot of 212. At this time, we're obviously not factoring any more sales closing during 25, but we'll certainly identify a Target as part of our 2026 guidance. Uh, in general though, uh from what we're seeing, the investment Market continues to improve both in terms of velocity and pricing the pricing increases notable because many asset trades are still on Lower quality or under leased assets, for example, over the last 12 months, there have been about 475 million dollars of sales in Suburban Austin at prices per square foot. Ranging from 75 to 470 per square foot and average occupancy of 67% and cap rates ranging from the

Gerard Sweeney: Buyers, including institutional buyers, are continuing to reemerge, so we anticipate the investment climate will continue to improve into 2026. On the dividends, as noted, our board decided to, or previously announced, our board decided to lower our dividend from $0.15 per share to $0.08 per share. We believe this revised dividend is sustainable and represents a CAD payout ratio much more in line with our historical averages. To the extent we continue to experience progress on the developments and cash flow growth from our operating properties, continued low capital costs, and reduced borrowing costs and increased CAD, we'll certainly reassess our dividend going forward. The idea was to set a good solid floor, give ourselves a position to generate $50 million of internal capital that we can use for reinvestment back into our properties.

Below single digits to Upward of 12% likewise in the PA suburbs, there were 242 million uh, dollars of sales at cap rates that range from 7 to 11 percentage at 85%. So buyers, including institutional buyers are continuing to reemerge so we anticipate the investment climate will continue to improve in 20 into 2026. Uh on the dividends as noted our board decided to to uh previously announced our board decided to lower our dividend from 15 cents per share to 8 cents per share.

We believe this revised dividends is sustainable and represents a cad pair ratio, much more in line with our historical averages, uh, to the extent. We continue experience, progress on the developments and cash flow growth from our operating properties continued low, Capital costs and reduce borrowing costs, and increased CAD will certainly reassess our dividend going forward. But the idea was to set a good solid floor.

Gerard Sweeney: With that, let me turn the floor over to Tom to review our financial results for the third quarter and an outlook for the balance of the year.

Give ourselves a position to generate 50 million dollars of internal Capital that we can use for reinvestment back into our properties.

Thomas Wirth: Thank you, Gerard. Good morning. Our third quarter net loss stood at $26.2 million or $0.15 per share. Our third quarter FFO totaled $28 million or $0.16 per diluted share and $0.01 per share above consensus estimates. Some of the general observations for the third quarter are FFO from our unconsolidated joint ventures totaled a loss of $6 million or $1 million higher than our $5 million forecast, partially due to the delayed recapitalization activity during the quarter. G&A expense was below our reforecast by $600,000, primarily due to timing. Other income was $600,000 above our reforecast due to various items. Other forecasted quarterly results were generally in line. Looking at our debt metrics, third quarter debt service and interest coverage ratios were 2.0, consistent with the second quarter. Our third quarter annualized combined core net debt to EBITDA was 8.1 and 7.6, respectively.

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

Uh thank you Jerry and good morning, our third quarter, our net loss stood at 26.2 million or 15 cents per share. Our third quarter ffo total 28 million or 16 cents per diluted share and 1 cent per share above consensus estimates. Some of the general observations for the third quarter, our ffo problem, our unconsolidated joint ventures total a loss of 6 million or 1 million dollars higher than our our 5 million dollar forecast partially due to the delayed recapitalization activity uh during the quarter. Uh G&A expense was below, our forecasts by uh 600,000 uh primarily due to timing and other income was 600,000 above uh are we forecasted due to the various items? Other forecasted quarterly results were generally in line.

Thomas Wirth: Both metrics were within or below our business plan range. From a core portfolio composition during the third quarter, we made one adjustment to our projections. We had forecast 250 King of Prussia Road becoming a stabilized core property during the third quarter. However, due to a tenant delay in occupancy, the stabilization date has been moved back to Q2 2026. As Gerard highlighted, we completed a successful five-year bond issuance that closed in early October, which generated gross proceeds of $296 million. Proceeds were used to pay our $245 million secured CMBS loan, which was due in 2028. Both transactions closed in early October. It is important to highlight that in June 2025, we executed an unsecured bond cap of $150 million at 7.04%. The recent issuance represents a 13% decrease in our unsecured borrowings since that June offering.

Uh, looking at our debt metrics, uh, third quarter Debt Service and interest coverage. Ratios were 2.0 consistent with the second quarter, our third quarter annualized combined core and that debt to I was 81 and uh 76 respectively both metrics were within or below our business plan range from a core portfolio composition during the third quarter. We we made 1 adjustment to our projections. We had forecasted in 250 King of Prussia Road, becoming a stabilized core property during the third quarter, however, to do to a tenant delay in occupancy. Uh, the stabilization date has been moved back to to 1 q26 um as Jerry High.

Thomas Wirth: In addition, the coupon on our recent bond issuance is slightly below our pro forma 6.26% weighted average effective rate. We feel the significant increases to our interest expense from future refinancing should come down. We continue to maintain a strong liquidity position and use further sales and refinance proceeds to reduce unsecured debt and to improve our credit profile. We have time to work on this improvement with no unsecured bonds maturing until November 2027. Giving effect to the CMBS loan prepayment at the end of the quarter, our wholly owned debt was 100% fixed with a weighted average maturity of 3.5 years. This excludes the 3025 construction loan, which will now be consolidated and matures in July of 2026. As highlighted, we adjusted and narrowed our guidance for 2025.

Ific increases to our interest expense from The Ref from future, refinancing should uh, come down.

We continue to maintain a strong liquidity position and use further sales, and refinance proceeds, to reduce, unsecured debt, and to improve our credit profile.

We have time to work on this improvement with no unsecured bonds maturing until November 27.

Uh giving effect to the cmbs loan. Prepayment at the end of the quarter, our wholly owned debt was 100% fixed with a weighted average maturity of 3.5 years. Uh this excludes the 30 uh 25 construction loan, which will now be Consolidated and insurers in July of 2026.

um,

Thomas Wirth: The midpoint reduction is 10% and is comprised of a $0.07 reduction from the transaction costs associated with the repayment of the $245 million CMBS loan. A reduction of $0.04 per share is primarily due to the delays in recapitalizing our development projects, which we expected to generate some benefit to our third and fourth quarter results. There is some negative carry from the bond issuance and the CMBS redemption, and we did have a delay in the stabilization of 250 King of Prussia.

Thomas Wirth: Looking at fourth quarter guidance, in connection with the October buyout and consolidation of 3025 JFK, the impact to our fourth quarter results will be an increase to GAAP NOI of $1.9 million, an increased interest expense of $2.9 million through the consolidation of the construction loan, and a $2.7 million improvement in our loss from unconsolidated joint ventures, and a reduction in interest income of about $600,000 due to our reduced cash on hand balances. While that is muted to our fourth quarter, the opportunity to buy out our higher-priced capital partner ahead of a final stabilization gives us flexibility entering 2026. The $8 million of annualized NOI for the fourth quarter will increase to over $20 million in the first quarter and grow from there.

As highlighted, we adjusted and narrowed our guidance for 2025. The midpoint reduction is 10% and is comprised of a 7-cent reduction from the transaction costs associated with the repayment of the $245 million CMBS loan, a reduction of $4 million. The 4 cents per share is primarily due to the delays in recycling our development projects, which we expected to generate some benefit to our Q3 and Q4 results. There is some negative carry from the bond issuance and the CMBS redemption, and we did have a delay in the stabilization of 250 King of Prussia.

Uh, looking at fourth quarter guidance in connection with the October buyout and consolidation of 3, 3025 JFK, the impact to our fourth quarter results will be an increase to GAAP and AI of $1.9 million and increased interest expense of $2.9 million through the consolidation of the construction loan, and a $2.7 million improvement in our loss from unconsolidated joint ventures. Additionally, there will be a reduction in interest income of about $600,000 due to reduced cash on hand balances.

Thomas Wirth: With the property now wholly owned, we have the flexibility to refinance the above-market debt with lower-priced unsecured, secured, or agency debt, and we also can assess the opportunity to find a common equity partner and potentially reduce our equity stake. Turning to the rest of the fourth quarter, property level operating income will total about $71 million and will be similar to the last quarter results with 3025 being included in the fourth quarter, but lower NOI primarily due to a known move-out in Austin as well as the pushback of 250. Our FFO contribution from our joint ventures will total a negative $2 million, which is sequentially lower in the third quarter, primarily due to the fourth quarter consolidation of 3025, higher NOI at both Solaris and Avira, and partially offset by a higher loss at 3151.

Uh, while that uh is muted to our fourth quarter, the opportunity to buy out our higher price Capital Partner ahead of a final stabilization gives us flexibility entering 2026. The 8 million dollars of annualized, noi for the fourth quarter will increase to over 20 million in the first quarter and grow from there.

With the property. Now wholly owned, we have the flexibility to refinance the above Market debt with lower price unsecured secured or agency debt. And we assess as we also can assess the opportunity to find a common Equity partner or or, and potentially reduce our Equity stake.

Property level oper, okay, turning to the rest of the, uh, fourth quarter property level, operating income will total about 71 million and will be similar to the last quarter, uh, results with 3025 being included in the fourth quarter but uh, lower noi. Primarily due to a uh a known move out in Austin as well as uh the push back of uh 250.

Thomas Wirth: G&A expense for the quarter will total about $8 million, representing a full-year expense of $42.6 million, and within our 2025 business plan range, our interest expense will approximate $38.5 million, sorry, and the capitalized interest will be about $2.5 million. Sequential increase in the interest expense is primarily due to the consolidation of 3025 JFK, lower projected capitalized interest, and the negative carry impact of the $300 million of unsecured bonds offset by the $245 million of CMBS loan prepayment. Termination fees and other income will total about $2 million, and net management and development fees will also be about $2.5 million. We anticipate no property disposition activity for the balance of the year. We anticipate no ATM or buyback activity, and our share count will be roughly 179.5 million shares.

Our ffo contribution from our joint ventures will total a negative -2 million uh which is sequentially lower and the third quarter primarily due to the fourth quarter of consolidation of 3025, High RN. Why it both Solaris and Aira and a partially offset by a higher uh, loss at 3151.

G&A expense for the quarter will total about 8 million dollars. Representing a full year expensive 42.6 and within our 2025 business plan range, our interest expense will approximate 35 and 838 and a half million, sorry and a capitalized, interest will be about 2 and a half million. Sequential increase in the interest expense is primarily due to the consolidation of 325 uh lower projected, capitalized interest and the uh negative carry impact of the 3000 million dollars of unsecured bonds offset by the 245 million of of cmbs loan pre uh repayment.

A termination fees and other income will total about million dollars, and net management. And development fees will will also be about 2 and a half million dollars.

Thomas Wirth: Turning to our capital plan, our capital plan for the balance of the year totals $388 million and is fairly straightforward, but with some adjustments based on the recent capital markets activity. Our 2025 FFO payout ratio for the third quarter was 93.8%. Looking at the larger uses, the repayment of the CMBS loan is $245 million. We used just over $70 million to acquire the preferred equity interest at 3025 JFK. Our development spend will total $24 million, which includes 165 and 250 King of Prussia Road. Our food hall at 1 Drexel Plaza is also in those numbers, and we have $14 million of common dividends, $8 million of revenue maintaining capital, and $12 million of revenue creating capital.

Um, we anticipate no Property Disposition activity for the balance of the year. We anticipate no ATM or buyback activity, and our share count will be roughly 179 and a half million shares.

Thomas Wirth: The funding sources are the $300 million unsecured bond issuance, $25 million of cash flow after interest payments, and $5 million of a proposed and expected King of Prussia construction loan for our hotel. Based on the capital plan, we are anticipating an incremental $58 million of our cash being used and balance end of the year of roughly $17 million, with no outstanding balance on our $600 million unsecured line of credit. While our 2025 business plan net debt to EBITDA range is between 8.2 and 8.4, due to the consolidation of 3025 JFK, we project this will temporarily increase to 8.8 times at the end of the fourth quarter. That 8.8 is generated by the consolidation of 3025 JFK, or about 0.4 of a turn.

Includes 165 and 250 King of Prussia Road. Our food Hall at 1, Drexel pza is also in those numbers and we have 14 million of common dividends. Uh, 8 million of Revenue, maintaining capital and 12 million dollars of Revenue, creating Capital, the funding sources, are the million dollar unsecured Bond issuance, uh, 25 million of cash flow after interest payments and 5 million of, uh, a proposed and expected King of Prussia construction loans, uh, for our hotel,

Uh based on the capital plan, we are anticipating an incremental, 58 million of our cash being used and balanced end of the year of roughly 17 million with no outstanding balance. On our, 600 million dollar on secured line of credit,

Thomas Wirth: When 3025 JFK income stabilizes in 2026, that ratio will decrease by 0.3 of a turn for only a net increase of 0.1 of a turn. Our net debt to GAV will approximate 48%. Our core net debt to EBITDA will also be impacted temporarily by the same EBITDA adjustments we just made for 3025. We anticipate our fixed charge and interest coverage ratio will be negatively impacted by the financing activity and the consolidation of 3025, and we'll reduce our fixed charge to about 1.8. With incremental income from the development projects, we anticipate that leverage will then begin to improve as we get into 2026. I will now turn the call back over to Gerard.

While our 2025 business plan, net debt to ibida range is between 28.2 and 8.4 due. To the consolidation of 3025 JFK, we project. This will temporarily increase to 8.8% 8 times at the end of the fourth quarter. Um, however, uh, and and that is, the 8.8 is generated by uh the consolidation of 3025 or about 4 tenths of a turn. However, when 3025 JFK income stabilizes in 2026 that ratio will decrease by 3 uh tenths of a turn um or a for only a net increase of 1 uh 10

Of attorney increase.

Our net debt to gav will approximately, 48% are going to coordinate debt to ibida. We'll also be impacted uh, temporarily by the same. Um, ibida adjustments. We just made for 3025. We anticipate our fixed charge and interest coverage ratio will be negative impacted by the financing activity, uh, and the consolidation of 3025 and and we'll reduce our fixed charge to about 1.8 with incremental income from the development projects. We anticipate that leverage will then begin to improve as we get into 2026.

Gerard Sweeney: Hey, Tom, thank you very much. To wrap up, you know the operating platform remains in very solid shape, very limited rollover the next couple of years. We're growing effective rents in many of the submarkets, accelerated some of our leasing programs to make sure that we are doing everything we can to take advantage of both the recovering market and the reduction in our competitive base. We continue to have as a priority focus for the company stabilizing all these development projects. While we have great success thus far, we have work to do, and that pipeline is not completely translated to quarterly earnings growth yet. As Tom outlined, even using 3025 JFK as an example, there's tremendous levels of NOI coming into the balance sheet and P&L over the next year or so. The groundwork's been laid, and we're building on the continued momentum to drive long-term growth.

I will now turn the call back over to Jerry.

Hey Tom, thank you very much. Uh, well to wrap up, you know, the the, the operating platform remains in very solid shape, very limited role over the next couple of years. Uh, we're growing effective rants in, many of the submarkets accelerated, some of our leasing programs to make sure that we are. We are doing everything we can to take advantage of both the recovering Market.

And the reduction in our competitive base. Uh, we continue to have as a priority Focus for the company uh, stabilizing all these development projects. And while we have great success thus far, we have work to do. And that pipeline is not completely translated to quarterly earnings growth yet. But as Tom outline, even using 3025, as an example, there's tremendous, uh, levels of nli coming into the balance sheet and pnl over the next

Gerard Sweeney: The operating platform, as I noted, remains stable with very limited rollover, and our liquidity is in excellent shape, and we're well positioned to take advantage of continued market improvement. Jonathan, with that, we're delighted to open up the floor to questions. As we always do, we ask that in the interest of time, you limit yourself to one question and a follow-up.

Over the next year or so. Uh, so the ground work's been laid and we're building on the continuing momentum to drive long-term growth

Operator: Certainly. Our first question for today comes from the line of Seth Berge from Citi. Your question, please.

The operating platforms. I know that remain stable with very limited rollover and our liquidity is an excellent shape and we're well positioned to take advantage of continued Market Improvement. So Jonathan with that, we're delighted to open up the floor to questions as we always do. We ask that the interest of time, you limit yourself to 1 question and a follow-up.

[Analyst 1]: Hi, this is Lauren on behalf of Seth. Thank you for taking my question. Could you go over in more detail how we should think about the timing and process of the recapitalizations?

So certainly, and our first question for today, comes with the line of set. B from City, your question, please?

Gerard Sweeney: Sure, be happy to. In fact, it's a great question because I know that the recapitalizations and the timing of them is a big impact. Let me spend a few moments to answer your question. By way of quick background, those preferred structures were put in place as bridge capital for us that would preserve all the upside of these properties accruing to Brandywine. They were fixed payment structures with costs of capital from the high single digits to the teens. The financial reporting treatment of those structures was that we needed to recognize as a current period expense the accrued but not paid in cash return on that capital. Those structures were always designed to have the accrued unpaid return paid out of a capital event, which is exactly what just happened on 3025.

Hi. This is Lauren on behalf of Seth. Thank you for taking my question could you go over in more detail how we should think about the timing and process of the wreck capitalizations?

Uh, sure be happy to. In fact, it's it's a it's a great question because I know it, you know, the the recap capitalizations and the uh uh and the timing of them is, is a big impact. So let me let me spend a few moments to answer your question. Uh, you know, and by the way, a quick background, you know, those preferred structures were input in places Bridge capital for us, that would preserve all the upside of these properties occurring to Brandy Wine. They were fixed payment structures with cost of capital from the high single digits to the teams. Uh the financial reporting treatment of those structures was that we needed to recognize as a current period expense the accrued but not paid in cash return on that capital.

Gerard Sweeney: As we look at the development pipeline, as I think you all know, because many of you have visited the properties, they're all very high quality, extremely well-positioned assets in two mixed-use master plan communities. Two are now stabilized with 3025, which includes both Avira and the office component. That took about 24 months from completion to stabilize. Solaris is stabilized. We delivered that in the late third, early fourth quarter of 2024, and that stabilized about a year later. Good progress on that. The pipeline on 3151 in Uptown is big enough where we have a clear path to stabilization, albeit with some uncertainty regarding the timing of when those leases will actually kick in place. While the approach for each of the ones may vary a bit, the goal is to bring on as much NOI as possible onto our P&L and/or recover significant capital.

Uh, and those structures were always designed to have the accrued unpaid return paid out of a capital event, which is exactly what just happened on 3025. Uh, and as we look at the development pipeline.

Gerard Sweeney: As we look at the different options, as Thomas Wirth touched on a little bit, those recaps can be financed with non-core asset sales, lower cost financings, parity, pursue ventures on some assets. We have a fairly wide range of options on each one. To spend a moment looking at each one, let me walk through. 3025, we recapped at our highest cost of capital partner there. By the expensing of those preferred returns, we were going to incur in 2026 just shy of $10 million of preferred charges or about $0.04 a share. That buyout eliminates that drag on earnings. The capital options we have are very robust. The rate on the current construction loan is just shy of 8%. If we did an unsecured financing to take out that construction loan, we can save close to 200 basis points or about $4 million in interest.

Uh, 2 are now stabilized with with 3025, which includes both the deer and the office component. You know, that took about 24 months with from completion to stabilized, Solaris is stabilized. We delivered that in the uh uh late third early fourth quarter of 24 and that stabilized about a year later, so good progress on that. The pipeline on 3151 in uptown uh, is big enough where we have a clear path to stabilization albeit with some uh, uncertainty regarding the timing of when those leases will actually kick in place. Uh, but while the approach for each of the ones may vary a bit, the goal is to bring on as much. Noi as possible onto our p&l uh, Andor recover, significant capital. And as we look at the different options as Tom touched on a little bit, you know, they can those Recaps can be financed with non-core asset sales lower cost. Financing par Pursuit Ventures on some assets. So we have a

Fairly wide range of options uh, on each 1. But but to spend a moment looking at each 1, uh uh, let let me let me walk through. Uh so 3025, you know, we recapped at our highest cost of Capital Partner there, uh the uh our we buy the expense of those preferred returns. We were going to incur in 2026 just shy of $10. Million of preferred charges. Uh, we're about

4 cents a share, so that buy at eliminates that drag on earnings. And then the capital options we have are, are, are, are, are very robust. I mean, the rate on the current construction loan is just shy of 8%.

Gerard Sweeney: If we actually do an agency-level financing on the residential piece, that overall cost of debt could be even lower. We also are looking at exploring a parity, pursue joint venture where we could recover some capital, and obviously always considering whether we sell the residential component or not. 3025 JFK now with that buyout behind us, takes away highest cost of capital in the rearview mirror, full control by Brandywine. With the debt coming due, we think we have some positive refinancing outcomes at a very straightforward level. Solaris is stabilized, but cash flow and the NOI is still recovering. As we noted on previous calls, to accelerate the lease up in that market, we did give concessions burning off. We did give concessions to get that original lease up achieved at the rate that we did. Right now, the capital markets aren't giving full credit to concession-level rents.

So if we did an unsecured financing to take out that construction loan, uh we can save close to 200 basis points or about 4 million dollars in interest. And if we actually do an agency level financing, uh, on the residential piece that overall, cost of debt could be even lower. Uh, we also are looking at exploring a power Pursuit joint venture, we could recover some capital and then obviously always considering whether we sell the residential component or not. So 3025, now would that buy behind us, take away highest cost of capital in the rear view mirror, full control by Brandy, Wine with the debt coming due. We think we have some positive refinancing outcomes uh at a very straightforward level.

Gerard Sweeney: We are now in the first wave of our renewals and very pleased with that progress. Our renewal rate on that project is 64%. We're getting about an 8% increase in rates. We're giving out no or very limited concessions on renewals and very limited concessions on new leases. Our 2026, based on the expensing of that preferred, in 2026, we'd have about $4 million or about $0.02 a share of charges on that. The approach on that project is we're already exploring a recap. That could be a sale or a joint venture on the existing asset. The current debt is just shy of 7% today. Agency debt on that would be somewhere in the very high 4% or low 5%.

Solaris is stabilized, uh, but cash flow in the noi is still recovering. Uh, as we noted on previous calls, we, you know, to accelerate the lease up in that market, we did give concessions burning off. We did give concessions to get that original lease up achieved at the right that we did. Uh, right now, the capital markets aren't giving full credit to concession level rents. So, we're now we're now in the in the first wave of our renewals. Uh and very pleased with that progress, our renewal rate on that.

Project is 64%.

We're getting about an 8% increase in rates.

Gerard Sweeney: Our target really is in the first half of 2026 to kind of achieve that recap once the concessions burn off on the lease schedule on the renewals and the marketplace recognizes the net effect of rents that we're generating on an ongoing basis. For 1 Uptown ATX, clearly some leasing work to do there. We have about 75,000 square feet under advanced lease negotiations that would take that project to 55% to 60% and a really good pipeline behind it. Right now, we're projecting, if we do nothing with that, about a $0.025 per share preferred expense charge in 2026. Our approach there is get a little more leasing done to more visibility. We are already talking to several potential partners about a parity, pursue recap. We have our lead tenant there has an expansion right in mid-year that we'll see if they exercise or not.

We have we're giving out no or very limited concessions on renewals and very limited concessions on new leases, uh, our 26 based on the expensing of that preferred in 26 we'd have about 4 million dollars or about 2 cents a share of charges on that. So the approach on that project is we're already exploring a recap uh that could be a sale or a joint venture on the existing asset. The the current debt is just shy of 7% today. So, again, agency debt, on that would be somewhere in the very high, uh, fours or low fives, and our Target really is in the first half of 26, uh, the kind of achieve that recap Once the concessions burn off on the lease schedule on the renewals, uh, and the marketplace recognizes that the the net effective rents that were generating on an ongoing basis.

Uh, for 1 Uptown, you know, clearly some leasing work to do there. Uh, we have about 75,000 square feet under Advanced lease. Negotiations, that would take that project to, you know, 55 to 60% and a really good pipeline behind it, you know? Right now we're projecting uh if we do nothing with that, about a 2 and a half cents per share, preferred expense charge in 26 and our approach. There is uh, get a little more leasing done tomorrow.

Gerard Sweeney: 1 Uptown ATX is most likely a late first half, early second half recap event. Looking at 3151 JFK, that's our second highest cost of capital. We're obviously dealing with the challenge of getting that property leased up. The project's been very well received based on the pipeline by a number of select investors and several debt sources. As the second highest cost of capital on our development ventures, we have about $8 million in expense charges on that property in 2026, just from the preferred. With the process we have underway, we think that a partner buyout is a near-term event. That could be financed through other sales or much lower cost financings. We own that property without any debt on it. Our hope is to get 3151 JFK across the finish line no later than the first quarter of 2026. Hopefully, that roadmap is helpful.

More visibility. We are already talking to several potential Partners about a parappur recap. Uh, we have our our lead tenant there has an expansion rate in mid year that we'll see at the exercise or not. So, 1 option is most likely a late first half early, second half recap event,

Of capital and we're obviously dealing with uh with the the the challenge of getting that property leased up the Project's been very well received based on the pipeline by a number of Select investors and several debt sources. So as the high as the second highest cost of of of capital in our development Ventures, uh we have about 8 million dollars in in expense charges on that property in 2026 just from the preferred. So, with with the process we have underway, we think that a partner biote is a near-term Revenge. Uh, that could be financed through other sales or much lower cost financing as we own that property without any debt on it. So our hope is to get 3,151 across the Finish Line. No later than the first quarter of uh of 26. So hopefully that road map is helpful.

[Analyst 1]: Yes, that was a very helpful overview. Thank you.

Thomas Wirth: You're welcome. Thank you.

Yes, that was a very helpful overview. Thank you.

Operator: Thank you. Our next question comes from the line of Manos Ubeka from Evercore ISI. Your question, please.

You're welcome. Thank you.

[Analyst 2]: Great, thank you. Just wondering if you could touch on a little bit more on 1 Uptown ATX. It was obviously good to hear that the pipeline is up and you have some leads in the latest stage negotiation pairs. Could you maybe clarify, like out of the total leasing prospects that you see at the asset, how much is for spec suites versus like full-floor users? What type of tenants those are, if those are real net growth in the market or just kind of like relocation tenants? On the second one, just like on the broader scope of the development land out there, what should we maybe expect in terms of starts in 2026? I assume obviously like another commercial part is more kind of further out as we are leasing up the block A first. Maybe I know there's contemplations for additional residential or hotel projects.

Thank you. And our next question comes from the line of mannose. Rebecca from evercore isi your question, please.

Great. Thank you. Just wondering if you could touch on a little bit more on Uptown ATX. I was always eager to hear that the the pipeline is up. And you have some lease in, in the later stage, negotiation, uh, past

[Analyst 2]: Kind of maybe give us an idea in terms of timeline or what to expect in 2026 there as well.

Gerard Sweeney: Okay, great question. Thank you. A couple overview comments as we look at Austin. Look, I mean, Austin clearly has a disequilibrium, particularly in the CBD marketplace. I mentioned the number of tenants in the market looking and the increase in third quarter leasing activity. You know about 85% of that leasing activity in the market is being captured by Class A buildings. When you drill down to the Uptown domain submarket, which is really our competitive set right now since 405 Colorado downtown is fully leased, that's about 3.7 million square feet. That submarket is about 96.3% occupied. You've got about 68,000 square feet of sublease space in two domain buildings in two blocks of 35,000 square feet or so, which is down dramatically from just a year ago. One tenant indeed did put 100,000 square feet on the market for sublease in one of the domain tower buildings.

Could you maybe clarify like out of the total leasing, uh, prospects that you see at the asset how much is for spec, Suites versus like full for you flew our users, what type of tenants those are, those are, um, real net growth in the market or just kind of like relocation up tenants. And then on the second 1, just like on the broader scope of the, uh, development land out there. Uh, what should we maybe expect in terms of starts in 26? I assume obviously like the uh, another commercial part is more, uh, kind of further out as we're leasing up with the block, a first, but maybe I know there's uh, contemplations for additional residential or hotel, uh, projects. So, kind of maybe give us an idea in terms of timeline or what to expect in 26 days as well.

Okay. Ah ah. Ah, great question. Thank you. Um, and, and a couple overview comments is as, as you look at, uh, at Austin. Look, I mean, Austin clearly is a, has a disequilibrium, particularly in the CBD Marketplace. Uh, I mentioned the number of tenants in the market looking and the increase in in, uh, in third quarter, leasing activity. Uh, any you know, about 85% of that, leasing activity in the market is being captured by Class A buildings. But when you drill down to the Uptown domain submarket, which is really our competitive set right now, since 405 Colorado, downtown is fully least, uh, you know, that's about 3.7 million square feet. Uh, that submarket is about 96.

.3% occupied. You've got about 68,000 square feet of sublet space in 2 domain buildings, in 2 blocks of, you know, 35,000 square feet or so, which is down dramatically from just a year ago.

Gerard Sweeney: You've got about 168,000 square feet of sublease space in that submarket. That's about 7% vacancy, so a fairly tight market. Also, the train station, which we noted in the supplemental package, did in fact start construction. That has spurred a lot of additional interest because now it's delivered in the first half of 2027. CAT Metro, through this, these are their numbers, not ours, projects this to be the second busiest train station along that red line. A real people mover that dramatically improves labor pool accessibility. We think that's a nice catalyst to get some additional activity. The other factor is that we have a number of tenants who are in our pipeline who are downtown or doing market-wide searches, and we're really amplifying the fact through our team that there's a $23 cost difference between being downtown or being at Uptown.

Uh, 1 Tennent indeed, did put 100,000 square feet, uh, on the market for sublease in in 1 of The Domain Tower buildings. So you've got about 168,000 square feet of subly, space in that submarket. So that's about 7% vacancy. Uh, the, uh, so a fairly tight Market, uh, also, you know, the train station which we noted in the supplemental package did. In fact, start construction, uh, that has spurred a lot of additional interest, because now, it's delivered in the first half of 27. Uh, the cat Metro, uh, through this is, these are their numbers. Not ours projects. This to be the second busiest train station, along that red line. A real people mover that dramatically improves labor pool accessibility. So we think that's a nice Catalyst to get some additional activity. And the other factor is that, you know, we have a number of tenants who uh, are in our pipeline who are downtown or doing Market.

Gerard Sweeney: Most of that is, you know, there's a $5 still in rent, $10 still in expenses. It's a very solid economic decision. With that background, and sorry for all that detail, but I want to set the table for why we're still very optimistic about 1 Uptown's success. We have a number of tenants in the pipeline. We have a number, frankly, that are kind of in-market relocations or kind of in the 4 to 10 thousand.

Operator: Square foot range that are kind of spec suite tenants, prospects. We have a couple of tenants in the 80,000 to 100,000 square foot range. There are multiple floor tenants that have toured the property and we're in discussions with them. We have one full floor tenant that is at least under negotiation at this point. I think, George, any other color you want to add to that?

Of multiple floor. Tenants that uh,

Operator: Yeah, I think, you know, we've got, like Jerry said, the one, we have one floor dedicated to spec suites, and we've got either leases in late stages of negotiation and other pipeline prospects for that floor. Then a lease out for another full floor user. Of course, we have the underlying expansion rights with NVIDIA, who signed last quarter. Again, I think we feel good about the pipeline, the composition of it, the spec suites have been well received. If the market continues to shift in the spec suite direction, we've kind of done that now with two floors and are prepared to shift quickly as needed.

Have toward the property and we're, we're in discussions with them and then we have 1, full floor tenant. That is a lease under negotiation at this point. I think George any other caller want to add to that. Yeah, I think, you know, we've got like Jerry said, the 1, we have 1 floor dedicated to spec suite and we've got uh, either leases uh, you know

Operator: Thanks, George. To answer the second part of your question, look, we're major folks at Uptown, make no mistake, is lease 1 Uptown and recap both projects. That's number one, absolute top shelf priority, recognizing, I think, the value we have long term at our Uptown development. We have a number of discussions underway with large users who would be interested in doing build the suites at that location. They are still early stage and are not detracting from our core mission of getting 1 Uptown leased. We are also, as we've noted in the SIP, moving forward with the planning of block B, the objective there to be submitting site plan for site plan approval by the end of the fourth quarter of this year, with hopefully getting approvals in late 2026.

In late stages of negotiation, uh, and other pipeline prospects for that floor. And, uh, and then a lease out for another full floor, user. Uh, and then, of course, we have, you know, the, uh, underlying expansion rights, uh, you know, with Nvidia who, uh, you know, signed the last quarter. So, so again, I think we feel good about the pipeline, the composition of it. The spec Suite have been well received, uh, if the market continues to shift in the spec Suite, uh, Direction. Uh, you know, we've kind of done that now with 2 floors and uh and are prepared to shift quickly as needed. Thanks George. And and then to answer the second part of your question, look, we're uh, major Folks at Uptown make no mistake is at least 1 of them uh and recap both projects. So that's number 1, absolute topshelf priority. Uh, recognizing I think the value we have long term at our Uptown development. You know, we we have a number of discussions underway with large users.

Who would be interested in building the suits at that location? They are still in the early stage, and are not detracting from our core mission of getting Uptown, at least.

Operator: Block B consists of a multifamily property rental, a large retail base, and a hospitality component, i.e., a hotel, and obviously parking. We are working with a retail and hospitality partner as we think through the design components of that. As those plans get finalized and priced, we will be looking for the right capital answer to facilitate that project moving forward. Obviously, with the partners we have involved, they have capital resources. BRANDYWINE has significant embedded value in the land that that project will sit on. We think that's a very, very viable option for us in terms of our equity contribution with land value. We're looking at a number of other, as I mentioned, build the suites, but again, very low priority compared to mission critical of recapping these development projects and getting 1 Uptown leased.

We are also as we've noted in in the Sip, you know, moving forward with the planning of uh of Block B to the objective, there to be submitting site plan for site plan approval, by the end of the fourth quarter. This year, uh with hopefully getting approvals in late 26.

Block B consists of, uh, ah, ah, ah, ah, multi-family property rental, uh, a large retail base, and a hospitality component, uh, i.e., hotel.

Uh, and obviously parking. Uh we are working with a retail and Hospitality partner as we think through the design components of that uh uh and are as as those

Plans, get finalized and priced. We will be looking for the right Capital answer to facilitate that project moving forward. Uh, obviously with the partners, we have involved, they have capital resources, uh, you know, Brandy Wine has significant embedded value in the land that that project will sit on. So we think that's a very, very viable option for us in terms of equity contribution with land value. So, uh, that we're

Operator: Certainly happy to provide any color on that as the quarters go by.

Gerard Sweeney: Perfect. Thank you.

Looking at a number of other projects, as I mentioned, building the suits is again a very low priority compared to the mission-critical task of recapping these development projects and getting one Uptown lease. But I’m certainly happy to provide any color on that as the quarters go by.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our next question comes from the line of Dylan Pruszenski from Green Street. Your question, please.

Perfect, thank you.

Thomas Wirth: Hey, guys. Thanks for taking the question. Maybe just first one on, can you explain why you all decided to issue the unsecured notes and then take out the CMBS debt? If my recollection is correct, I thought the CMBS debt didn't or wasn't too pricey in terms of the rates. Just sort of curious your guys' thoughts on how you guys approached that.

Thank you. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press *1, 1 on your telephone. Our next question comes from the line of Dylan Prosinski from Green Street. Your question, please?

[Analyst 1]: Yeah, Dylan, this is Tom. I think the way we approached it is that we've been looking at the CMBS loan and thought about actually prepaying a couple of assets and bringing them out as unsecured, for a couple of reasons. One for leasing, one, you know, potentially to do something with them on the capital market side. We were already thinking about it when the rates came in as much as they did, and the differential in rate was only a quarter, 25 basis points, basically. We thought, let's unencumber the assets. It helps our UAP, helps all of our unleveraged ratios. We thought that was a good execution. We knew there was the charge of $10 million of cash that went out the door with that. It also was a good way to reset our rates with the debt capital markets.

Hey guys, thanks for taking the question. Maybe just first 1 on. Can you explain why you all decided to issue the unsecured notes and then take out the the cmbs debt? Uh, my recollection is correct. I thought the cmbs debt didn't or wasn't too pricey in terms of the rate. So just sort of curious, you guys' thoughts on how you guys approach that.

Hey John, this is Tom. Uh, I think the way we approached this is that we we, we we've been looking at the cmbs, uh, loan and thought about actually prepaying a couple of assets and bringing them out, as unsecured, uh, for a couple reasons, 1 for leasing 1, you know, potentially to do something with them on the Capital Market side. So we were already thinking about it when the rates came in as much as they did and the differential and rate was only a quarter uh, 25 basis points. Basically, we thought, let's not encumber. The assets, it helps our UAP

Uh, helps all of our uh, unleveraged ratios. And we thought that was a, a good execution. We knew there was a, the, the charge 10 million dollars of cash that went out, the door with that, but um, if that was, it also thought it was also a good way to reset.

[Analyst 1]: The 7.04 we had done, the 7.04 cap we did in June was at a very high premium. I think it was close to a 1.07% of face. I think that really was hurtful in us getting that rate any lower. I think doing something at par, bringing our rate down into the lowest is kind of help reset that bar. Since it was issued, it's been trading fairly well, right around par. We thought that was also a consideration as well.

Face.

And I think that really was hurtful in us getting that rate. Uh, any lower I think doing something at par, uh, bringing our rate down into the lows kind of help reset that bar. Um, since it was issued, it's been trading fairly well, uh, right around par, uh, so we thought that was also a consideration as well.

Thomas Wirth: Maybe just a broader one. I know there's a few assets on the market in downtown Philadelphia. I'm not sure if you guys are sort of interested in buying assets, but I guess just as you guys think about your cost of capital today, just sort of long-term plans as it relates to how you think you can close the disconnect between where share trades versus where an NAV estimate might be, especially ours. Maybe you can sort of tie in just longer-term leverage targets in that. It might be helpful.

Let me just a broader 1. I know there's a few assets on the market in in downtown Philadelphia. Not sure if you guys are sort of interested in, in in buying assets. But I guess just as you guys think about,

[Analyst 1]: Yeah, Dylan, Jerry, thanks for the question. Yeah, look, I think we have a couple of really good ingredients to start to turn that perception around fairly quickly. That is the leasing up of the development projects and proving out their value proposition. Then recapitalizing, i.e., changing the capital stack of those projects. It really does remove the earnings overhang. I mean, if you really take a look at, you know, if you took a look at the existing preferred structures without being touched, I mean, there's a significant impact to earnings because of the financial reporting treatment we have on those. Simply by clearing up those recaps, getting control of those assets, and then pursuing better cost of capital outcomes for those, I think really winds up putting us in a great position as I look at the 2026 and the 2027.

You know your cost of capital today just sort of long-term plans as it relates to how you think you can close the the disconnect between you know where share trades versus where you know and and NAB estimate might be is especially ours and maybe you can sort of tie in just longer term, leverage targets and that it might be helpful.

Yeah, Dylan Jerry. Thanks for the question. Yeah, look I think the we think we have a couple really good ingredients to start to turn that perception around fairly quickly, and that is the leasing up of the development projects, improving out their value proposition. And then re recycling kind of I IE change in the capital stack of those projects that really does remove the the earnings overhang. I mean if you really take a look at, you know, our uh if you took a the existing preferred structures without being touched, I mean there's uh you know there's

[Analyst 1]: I think that's going to be a very key ingredient for us. The operating portfolio continues to perform very well. We have, as with any portfolio, there are some soft spots, but I think we're very encouraged with what's happening in each of the different submarkets we're in that really give us some significant ability to continue to drive effective rents across the board. We do have some assets that we have on the market and we will put on the market in 2026 that we feel are not great growers for us and actually adversely impact some of our growth objectives going forward. As we have done in the past, we look at those assets from a net present value standpoint and determine at what point in time we should sell those.

A significant, uh, impact to earnings because of the financial reporting treatment we have on those. So simply by clearing up, those Recaps getting control of those assets. And then pursuing better costs of capital outcomes for those. I think really winds up putting us in a great position in with, you know, as I look at at 26 and the 27. So I think that's going to be a very key ingredient for us. Look for the operating portfolio, continues to perform very well. Uh, we have some soft we have as with any portfolio, there are some soft spots, but I think we're very encouraged with, with what what's happening in each of the different sub-markets. We're in that really, give us some significant ability to continue to drive effective rents across the board. We do have some assets, uh, that we, uh, have on the market and we will put on the market in, in, in 26 that we feel are not great Growers for us. And actually adversely impact, some of our, some of our growth objectives.

[Analyst 1]: I think the major issue we're focused on right now is proving out the value thesis for these development projects. I think it's generally recognized in the private markets that the land holdings and the approvals we have in place at Uptown and at Schuylkill Yards are incredibly valuable long-term value generators. Our challenge, given our public cost of capital, is to determine, from a market timing standpoint, when we should move forward with the next phase, but more importantly, how we finance those. I think the objective we had going into this round of development was we did the preferred structures, which had an incrementally higher cost of capital, but left all the residual value to Brandywine.

Going forward and as we have done in the past we look at those assets from a net, net present day. How do you standpoint and determine at what point in time? We should we should sell those. So I think the major issue we're focused on right now is proving out the value thesis for these development projects. I think it's generally recognized in the in in in the private markets that the land Holdings and the approvals we have in place at Uptown and at Schuylkill yards are incredibly valuable long-term

[Analyst 1]: I think as we look forward at some of the future development starts, assessing different capital structures will be very important because the penultimate objective is for us to get back to investment grade. We think we have a clear path to do that as we look at the numbers going forward. One of the impediments for us getting to investment grade has really been the impact on our fixed charge coverage. The reality is our fixed charge coverage has been impacted because our debt costs have almost doubled in the last four years. That's why, as I even noted in the comments, when I look at the existing bond pricing, as Tom touched on, our bonds are pricing or trading pretty well. We have two bonds outstanding, $900 million at rates north of 8%.

Value generators are challenged given our our public cost of capital is to determine, you know, from a market timing standpoint, when we should move forward with the next phase. But more importantly, how we Finance those I think you know the objective we had going into this round of development. Was we did the preferred structures which had an incrementally higher cost of capital but left all the residual value to Brandy 1. I think as we look forward to some of the future development starts

Assessing different capital structures is, I think, very important because the penultimate objective is for us to get back to investment grade.

[Analyst 1]: We think the refinancing opportunities there as the time is right bring a lot of those financial and operating metrics back into a very good position. I think the takeaway point is we got some near-term hurdles in terms of getting these development projects leased. We've got to prove out to the marketplace that we can effectively recap these properties and create long-term value. Continue driving the operating results of the company as well as we have for the next few years into an ever-improving market. Then really focus on how we overall reduce leverage to hopefully, you know, improve our overall cost of public capital.

Uh we think we have a clear path to do that. As we look at the numbers going forward and 1 of the 1 of the impediments for us getting to investment grade has really been the impact on our fixed charge coverage. Uh, and the reality our fixed charge coverage has has been impacted because our debt costs have almost doubled in the last 4 years. Uh, that's why as I even noted in the comments when I look at the existing bond pricing as Tom touched on our bond price, our bonds are are are pricing are trading pretty well. Uh, you know, we have 2 bonds outstanding, 900 million dollars at rates north of 8%.

So we think the refinancing opportunities there as the time is right. Bring bring a lot of those financial and operating metrics back into a very good position. So uh I think the takeaway point we got some near-term hurdles in terms of getting these development projects least. We've got to prove out to the marketplace that we can effectively recap these properties and create long-term value.

Continued driving the operating results of the company as well as we have for the next few years into an Ever improving market. And then really focus on how we overall reduce leverage to hopefully, you know, improve our overall cost of public capital.

Operator: Thanks, Gerard. That was very thoughtful. Appreciate it.

[Analyst 1]: Thank you, Dylan.

That's very thoughtful. Appreciate it.

Operator: Thank you. Our next question comes from the line of Upal Rana from KeyBank. Your question, please.

Thank you, Dylan.

Thank you. And our next question. Comes to the line of up. Paul Rama from

Thomas Wirth: Great, thank you. Could you provide some detail on the board's decision to reduce the dividend? How should we be thinking about timing of the cash flow ramping up in 2026 in order to maintain a payout ratio that's a little more sustainable?

KeyBank your question, please.

Operator: Yeah, look, I think as we took a look at, and recommended to the board a couple of things. One is, as I've outlined before, the board really looked at what the operating cash flow was, what our refinancing requirements were, when we would expect the development projects to ramp up, and what capital was really required for the recaps. When they took a look at all of that, and we looked at the 2025, 2026, and 2027 landscape, the theory was after we had done some preliminary work on recapping some of the joint ventures, it became very clear that the cost of outside capital was a lot more than our internally generated capital.

Great, thank you. Uh, could you provide some detail on the board's decision to reduce the dividend? You know, how should we be thinking about timing of the cash flow ramping up in 26, in order to maintain a, you know, cat payout ratio? That's a little more sustainable.

Operator: The opportunity for the company to save $50 million of cash flow at a time when, as I mentioned with Dylan, our public cost of capital is prohibitive, it simply seemed to make a lot of sense. As we looked at the numbers, where we reduced the dividend to, we feel, as I mentioned in my script, is very sustainable. We do believe that as we start to bring more NOI onto the P&L, we have an opportunity to grow that dividend. Most importantly, as a last point, we talked to a lot of shareholders. We asked them their opinion on how they viewed the capital landscape, how they viewed the challenges the office sector faces. I think a lot of our shareholders were very supportive of a dividend reduction as a pragmatic conservation of capital. All those factors went into the board's decision.

Yeah. Like I think as we we took a look at uh uh and and and and recommended to the board, a couple things 1 is is they've outlined before, you know, the the the board really looked at what the operating cash flow was what our refinancing requirements were uh when we would expect the the development projects to ramp up and what capital was really required for uh for the Recaps and when they took a look at all of that and we looked at the at the you know, 2526 and 27 landscape. The theory was after we have done some preliminary work on recapping some of the joint ventures, it became very clear that the the the cost of uh the cost of outside Capital was a lot more than our internally generated Capital, uh, and that the opportunity for the, for the company, to say, $50 million of cash flow at a time, when, uh, as I mentioned with Dylan, our our, our public cost of capital is prohibitive. Uh,

They simply seem to make a lot of sense. Uh, the as we looked at the numbers where we reduced the dividend to, we feel, as I mentioned in in my script is, uh, very sustainable.

We do believe that as we start to bring more noi on, to the, on, to the p&l. Uh, we have an opportunity to grow that dividend. And then, most importantly, is the last point, we, we talked to, a lot of shareholders, we have some, their opinion on, you know, how they view the capital landscape, how they viewed. Uh, the challenge is the office sector faces and I think and I think a lot of our shareholders are very supportive of of the of the dividend reduction as a as a as a uh a pragmatic conservation of capital.

Operator: We had a good discussion and validated that the level that we cut it to is certainly, we think, a floor from which we can grow. Hopefully, as the market conditions improve, the debt markets get more constructive, we can generate more liquidity that will be in a position to go back to raising that dividend.

Thomas Wirth: Okay, great. That was helpful. Do you have any updates on the strategy to deal with the IBM move out in Austin coming in 2027?

So all those factors went into the board's decision. We had a a good discussion and uh validated that the level that we cut it to is is certainly we think a a floor from which we can grow. Uh and hopefully as the market conditions, improve the debt markets, get more constructive, we can generate more liquidity. That will be in a position to go back to raising that dividend.

Operator: We actually do. Look, IBM is going to be vacating, excuse me, IBM is going to be vacating spaces between the end of the, really beginning of the second quarter and through the third quarter of 2027. The impact on 2027 after factoring what we think will be expense savings, because that lease, we're getting reimbursed for expenses, many of which are variable. We think it'll be about a $12 million hole we need to fill. We're going down a couple of different paths. One is when we take a look at the existing leasing in place in our development projects, excluding 3151, we think the year-over-year growth in that income stream will more than amply cover that 2027 loss of revenue. More importantly, we are spending time looking at renovating the 902, 904, and 906 buildings at Uptown, which is about 500,000 square feet. We have plans underway.

Okay, great. That was helpful. And then, you know, do do you have any uh updates on the strategy to deal with the um IBM move out in Austin? Coming in 20, C.

Uh, we actually do, uh, you know, IBM is going to be vacating, excuse me. IBM is going to be vacating spaces between the, uh,

end of the, well, really beginning of the second quarter and through the third quarter of 27, uh, you know, the the uh, the impact on

27. Uh, after factoring what we think will be expense savings because that at least we're getting reimbursed for expenses, many of which are variable. So we think it'll be about a 12 million dollar hole. We need to fill, uh we're we're going down a couple different paths. 1 is when we take a look at the existing leasing in place in our development projects, excluding 31501, we think the year-over-year growth in that income stream will more than amply cover. Uh, that 27 that 27, uh, uh, loss of Revenue but more importantly,

Uh, we are spending time. Looking at the uh,

Operator: Our base in those buildings is very attractive. We are in the throes of pricing those renovation programs through, including thinking through the additional infrastructure that's required. As it stands right now, we think we're in a very good position to deliver completely renovated buildings that, frankly, as you may recall, they have great superstructures. We need new facade, new mechanical systems that will be able to deliver these state-of-the-art newly renovated buildings at a significant pricing discount to existing office rents that we think can really accelerate the absorption there. One of our hopes, if the plan progresses on schedule, is that we'll be able to deliver the first level of renovation in early 2027, kind of dovetailing with one of the IBM vacations.

At renovating the 9002 904 and 906 buildings at Uptown, which is about 500,000 square feet. We have plans underway are based in those buildings is very attractive. Uh, we are, uh, in in, in the throws of pricing those renovation programs through including thinking through the additional infrastructure that's required and

Operator: One of the reasons we're able to do that, you may recall, is we were very successful in getting some additional approvals from the city of Austin to increase the density at Uptown from 3.1 FAR to 12.1 FAR and increase the height limits on the buildings from 180 to 491 feet. We also have the ability to transfer density between blocks. By renovating those buildings, which are lower rise, we're not compromising any future growth density by doing that. The maximum density under our zoning is well, well beyond what we're currently planning to build. Having that flexibility to respond to changing market conditions, particularly given that train station and the growth of residential neighborhoods in that marketplace, we think is a very valuable commodity.

In uh, getting some additional approvals from the city of Austin to increase the density at 1, at Uptown from 3.1 f r to 12.1. F r and increase the height limits on the buildings from 180 to 491 ft.

We also do have the ability to transfer density between blocks.

Operator: The game plan is I think we can bridge the gap with just incremental income coming through the NOI from these new development projects, again, excluding 3151. The renovations coming online will help to deliver better NOI for us looking at 2028 and 2029. Hopefully, that answers your question.

So by renovating those buildings which are lower rise, we're not compromising any future growth density by doing that. Uh, and I mean, the maximum density under a zoning is, is well, well beyond what we're currently planning to build. But having that flexibility to respond, the changing marketing conditions, particularly given that train station, and the growth of residential uh, neighborhoods in that Marketplace, we think it's a very valuable commodity. So game plan is I think we can bridge the gap. With just incremental income coming through the noi from these new development projects. Again, excluding 3151 and

The renovations coming online will help to all deliver better. Noi for us looking at the 28 and 29.

Thomas Wirth: Yeah, that was great. Thank you so much.

Operator: You're welcome.

[Analyst 2]: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Gerard Sweeney for any further remarks.

Hopefully, that answers your question. Yeah, that was great. Thank you so much.

[Analyst 1]: Jonathan, thank you very much. Thank you all very much for participating in our third quarter earnings call. Our next call for fourth quarter and 2026 guidance will be in early February. We look forward to talking to you at that time. Thank you very much.

You're welcome. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Jerry Sweeney for any further remarks.

[Analyst 2]: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Hi, Jonathan. Thank you very much and thank you all very much for participating. Our third quarter, earnings call our next call uh for fourth quarter and 26 guidance will be an early February and we look forward to talking to you at that time. So thank you very much.

Thank you, ladies and gentlemen, if you're participation in today's conference, this does conclude the program. You may now disconnect good day.