Brandywine Realty Trust Q4 2025 Brandywine Realty Trust Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Brandywine Realty Trust Earnings Call
My ball, participants are and listen, only mode after the speech is presentation, there will be a question and answer session to ask a question during the 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 Sweeney president and CEO. Please go ahead sir.
Gerard H. Sweeney: Thank you for standing by, and welcome to the Brandywine Realty Trust Q4 2025 Earnings Conference 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 the session, you'll need to press *11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press *11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Gerard Sweeney, President and CEO. Please go ahead, sir.
Operator: Thank you for standing by, and welcome to the Brandywine Realty Trust Q4 2025 Earnings Conference 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 the session, you'll need to press *11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press *11 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Gerard Sweeney, President and CEO. Please go ahead, sir.
Guys, and thank you very much. Uh, good morning everyone. Thank you for participating in our fourth quarter, 2025 earnings call.
On today's call with me are George Johnstone, our Executive Vice President of Operations, Dan Palazo our senior Vice President, Chief accounting officer, and Tom worth our uh Executive Vice President and she and Chief Financial Officer prior to beginning certain information. Discussed on the call today May constitute for looking statements within the meaning of the federal Securities Law
Thomas Wirth: Jonathan, thank you very much. Good morning, everyone. Thank you for participating in our Q4 2025 Earnings Call. On today's call with me are George Johnstone, our Executive Vice President of Operations, Daniel Palazzo, our Senior Vice President and Chief Accounting Officer, and Thomas Wirth, our Executive Vice President and 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 assurances that the anticipated results will be achieved. For further information on factors that could impact our anticipated results, please reference our press release as well as our most recent annual and quarterly reports that we file with the SEC.
Gerard H. Sweeney: Jonathan, thank you very much. Good morning, everyone. Thank you for participating in our Q4 2025 Earnings Call. On today's call with me are George Johnstone, our Executive Vice President of Operations, Daniel Palazzo, our Senior Vice President and Chief Accounting Officer, and Thomas Wirth, our Executive Vice President and 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 assurances that the anticipated results will be achieved. For further information on factors that could impact our anticipated results, please reference our press release as well as our most recent annual and quarterly reports that we file with the SEC.
Speaker #2: you very much. good morning, everyone. Thank you for participating in our Fourth Quarter 2025 Earnings Call. On today's call with me are George Johnstone, our Executive Vice President of Operations; Dan Palaza, our Senior Vice President and Chief Accounting Officer; and Tom Werth, our Executive Vice President and Chief and Chief Financial Officer.
Although we believe the estimates reflected in these statements are based on reasonable assumptions. We cannot give assurances that the anticipated results will be achieved.
For further information on factors that could impact our anticipated results.
Please reference, our press release as well as our most recent annual and quarterly reports that we filed with the SEC.
During our prepared comments today, Tom and I will briefly review fourth quarter results and frame out the key assumptions behind our 26 guidance.
Speaker #2: 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 assurances that the anticipated results will be Prior to beginning, certain information achieved.
After that Dan George Tom and I are available for to answer any questions.
So to start moving forward from an operating portfolio management. And liquidity standpoint 2025 produced results very much in line with our business plan.
Speaker #2: 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.
Speaker #2: During our prepared comments today, Tom and I will briefly review Fourth Quarter results and frame out the key assumptions behind our 26 guidance. After that, Dan, George, Tom, and I are available for to answer any questions.
Thomas Wirth: During our prepared comments today, Tom and I will briefly review Q4 results and frame out the key assumptions behind our 2026 guidance. After that, Dan, George, Tom, and I are available to answer any questions. So, to start moving forward, from an operating, portfolio management, and liquidity standpoint, 2025 produced results very much in line with our business plan. We posted strong operating metrics reinforcing the continued flight to quality among our tenant base and our strong market positioning. Our wholly-owned core portfolio is 88.3% occupied and 90.4% leased. Forward leasing commencing after year-end increased 26% to 229,000 sq ft, with most taking occupancy in the next two quarters. We generated a near $27.3 million of spec revenue, very much in line with our business plan.
Gerard H. Sweeney: During our prepared comments today, Tom and I will briefly review Q4 results and frame out the key assumptions behind our 2026 guidance. After that, Dan, George, Tom, and I are available to answer any questions. So, to start moving forward, from an operating, portfolio management, and liquidity standpoint, 2025 produced results very much in line with our business plan. We posted strong operating metrics reinforcing the continued flight to quality among our tenant base and our strong market positioning. Our wholly-owned core portfolio is 88.3% occupied and 90.4% leased. Forward leasing commencing after year-end increased 26% to 229,000 sq ft, with most taking occupancy in the next two quarters. We generated a near $27.3 million of spec revenue, very much in line with our business plan.
We posted strong operating metrics reinforcing the continued flight to Quality among our tenant base, and our strong Market positioning our wholly owned core portfolio is 88.3% occupied and 90.4% least.
For releasing commencing after year and increased 26% to 229,000 square feet with most taking occupancy in the next 2 quarters.
Speaker #2: So to start moving forward, from an operating portfolio management and liquidity standpoint, 2025 produced results very much in line with our business plan. We posted strong operating metrics, reinforcing the continued flight to quality among our tenant base, and our strong market positioning.
We generated during the year, 27.3 million dollars of spec Revenue. Very much in line with our business plan and we also exceeded our tenant retention Target which ended up at 64%. Compared to our original business plan range of 59 to 61%
Speaker #2: core portfolio is Our wholly owned 88.3% occupied and 90.4% leased. Forward leasing commencing after year-end increased 26% to 229,000 square feet, with most taking occupancy in the next two quarters.
Leasing activity for the year approximate at 1.6 million square ft during the quarter. We executed 415,000 square feet of leases including 157,000 in our wholly owned portfolio and 257,000 square feet in our joint venture portfolio.
Speaker #2: We generated, during the year, $27.3 million of spec revenue, very much in line with our business plan. And we also exceeded our tenant retention target, which ended up at 64%, compared to our original business plan range of 59% to 61%.
Thomas Wirth: We also exceeded our tenant retention target, which ended up at 64% compared to our original business plan range of 59% to 61%. Leasing activity for the year approximated 1.6 million sq ft. During the quarter, we executed 415,000 sq ft of leases, including 157,000 sq ft in our wholly-owned portfolio and 257,000 sq ft in our joint venture portfolio. Our capital ratio for the year was 9.5%, slightly better than our 2025 business plan midpoint. This was the lowest capital ratio range we had in 5 years, primarily due to continued good capital control, our purchasing power, and a high percentage of renewals. On an annual basis, our GAAP mark-to-market was 4.2%, exceeding our business plan expectations. On a cash basis, we were in line with our business plan.
Gerard H. Sweeney: We also exceeded our tenant retention target, which ended up at 64% compared to our original business plan range of 59% to 61%. Leasing activity for the year approximated 1.6 million sq ft. During the quarter, we executed 415,000 sq ft of leases, including 157,000 sq ft in our wholly-owned portfolio and 257,000 sq ft in our joint venture portfolio. Our capital ratio for the year was 9.5%, slightly better than our 2025 business plan midpoint. This was the lowest capital ratio range we had in 5 years, primarily due to continued good capital control, our purchasing power, and a high percentage of renewals. On an annual basis, our GAAP mark-to-market was 4.2%, exceeding our business plan expectations. On a cash basis, we were in line with our business plan.
Our Capital ratio for the year was 9.5%, uh, slightly better than our 25 business plan. Midpoint this was the lowest capital ratio range. We had in 5 years, primarily due to continued good Capital control our purchasing power, and a high percentage of renewals
Speaker #2: Leasing activity for the year approximated 1.6 million square feet, during the quarter, we executed 415,000 square feet of leases, including 157,000 in our wholly owned portfolio and 257,000 square feet in our joint venture portfolio.
Speaker #2: Our capital ratio for the year was 9.5%, slightly better than our 25 business plan midpoint. This was the lowest capital ratio range we had in five years primarily due to continued good capital control or purchasing power and a high percentage of renewals.
But an annual basis, our get Mark to Market was 4.2% exceeding, our business plan expectations, and on a cash basis we were in line with our business plan, new leasing Mark to Market was very strong at 13%, uh, and 4% on a gap in cash basis respectively. And then, we also had some very encouraging news on, on the, on the tour volume standpoint, so fourth quarter to to volume exceeded the third quarter by 13%.
Speaker #2: On an annual basis, our gap mark-to-market was 4.2%, exceeding our business plan expectations, and on a cash basis, we were in line with our business plan.
Speaker #2: New leasing mark to market was very strong at 13%, and 4% on a gap in cash basis respectively. And then we also had some very encouraging news on on the on the tour volume standpoint.
Thomas Wirth: New leasing mark-to-market was very strong at 13% and 4% on a GAAP and cash basis, respectively. Then we also had some very encouraging news on the tour volume standpoint. Q4 tour volume exceeded Q4 by 13%. Tours in Q4 2025 exceeded Q4 2024 by 87%. For the quarter on a wholly-owned basis, 45% of all new leasing was a result of flight to quality. Our annual tour volume in 2025 outpaced 2024 by 20% on the fiscal number of tours, but more importantly, 45% on a square footage basis. We experienced increased tour levels in all of our core markets, particularly CBD, Philadelphia, and Radnor, at 49% and 45%, respectively, on a square foot basis, a great sign of an ever-improving market.
Gerard H. Sweeney: New leasing mark-to-market was very strong at 13% and 4% on a GAAP and cash basis, respectively. Then we also had some very encouraging news on the tour volume standpoint. Q4 tour volume exceeded Q4 by 13%. Tours in Q4 2025 exceeded Q4 2024 by 87%. For the quarter on a wholly-owned basis, 45% of all new leasing was a result of flight to quality. Our annual tour volume in 2025 outpaced 2024 by 20% on the fiscal number of tours, but more importantly, 45% on a square footage basis. We experienced increased tour levels in all of our core markets, particularly CBD, Philadelphia, and Radnor, at 49% and 45%, respectively, on a square foot basis, a great sign of an ever-improving market.
Towards in the fourth quarter, 25 exceeds fourth quarter, 24 by 87%. And for for the for the quarter on a wholly owned basis, 45% of all new leasing was a result of flight to Quality our annual tour, volume in 2025 outpaced 24 by 20% on the physical number of Tours. But more
More importantly, 45% on a square footage basis.
Speaker #2: So Fourth Quarter tour volume exceeded Third Quarter by 13%. Tours in the Fourth Quarter '25 exceeded Fourth Quarter '24 by 87%. And for for the for the quarter on a wholly owned basis, 45% of all new leasing was a result of flight to quality.
We experienced increased tour levels in all of our core markets, particularly CBD, Philadelphia and Ragnar at 49 and 45 basis, a great sign of of an Ever improving Market.
Speaker #2: Our annual tour volume in 2025 outpaced 24 by 20% on the fiscal number of tours, but more importantly, 45% on a square footage basis.
We also continue to experience. Good conversion rate from these tours, which is really the most important stat for 2025 56% of all towards converted to a proposal and from proposal 38% converted to an executed lease. So, very much in line with our historical averages and in fact slightly above in some cases,
Speaker #2: We experienced increased tour levels in all of our core markets, particularly CBD, Philadelphia, and Radner, at 49 and 45 percent respectively on a square foot basis, a great sign of of an ever-improving market.
Speaker #2: We also continue to experience good conversion rate from these tours, which is really the most important stat. For 2025, 56% of all tours converted to a proposal, and from proposal, 38% converted to an executed lease.
Thomas Wirth: We also continue to experience good conversion rate from these tours, which is really the most important stat. For 2025, 56% of all tours converted to a proposal. From proposal, 38% converted to an executed lease. So, very much in line with our historical averages and, in fact, slightly above in some cases. A few additional comments regarding our various market dynamics. In Philadelphia, which our largest submarket encompasses both CBD and University City, we're now 95% occupied and 97% leased, with only 6% of our space rolling through 2028. So, a very solid operating portfolio. Our Commerce Square joint venture property is now 90% leased, bringing our combined Philadelphia holdings, both wholly-owned and joint venture, to 95%. As I noted, overall activity levels remain strong.
Gerard H. Sweeney: We also continue to experience good conversion rate from these tours, which is really the most important stat. For 2025, 56% of all tours converted to a proposal. From proposal, 38% converted to an executed lease. So, very much in line with our historical averages and, in fact, slightly above in some cases. A few additional comments regarding our various market dynamics. In Philadelphia, which our largest submarket encompasses both CBD and University City, we're now 95% occupied and 97% leased, with only 6% of our space rolling through 2028. So, a very solid operating portfolio. Our Commerce Square joint venture property is now 90% leased, bringing our combined Philadelphia holdings, both wholly-owned and joint venture, to 95%. As I noted, overall activity levels remain strong.
Speaker #2: So, very much in line with our historical averages and, in fact, slightly above in some cases. A few additional comments regarding our various market dynamics.
Speaker #2: In Philadelphia, which are our largest submarket and contain can, encompass both CBD and university city, we're now 95% occupied and 97% leased, with only 6% of our space rolling through 2028.
6% of our space rolling through 2028. So, a very solid operating portfolio. Our Commerce Square joint venture property is now 90% least bringing our combined filled up your Holdings. Both wholly owned and uh joint venture to 95% as I noted over activity levels. Remain strong, uh interesting uh data points. Over The Last 5 Years. Brandy wines captured 30% market, share of all new leasing activities signed in uh Market Western University, City substantially. Outperforming our 15% share
Speaker #2: So, a very solid operating portfolio. Our Commerce Square joint venture property is now 90% leased, bringing our combined Philadelphia holdings—both wholly owned and joint venture—to 95%.
Uh, market, share, this trend accelerated during 2025 for the full year 54% of all new leasing signed in these markets. Was it a brandy wine property?
Speaker #2: As I noted, overall activity levels remain strong. interesting, data points. Over the last five years, Brandywine's captured 30% market share of all new leasing activity signed in, market west and university city, substantially outperforming our 15% share.
Thomas Wirth: Interesting data points: Over the last five years, Brandywine has captured 30% market share of all new leasing activity signed in Market West and University City, substantially outperforming our 15% market share. This trend accelerated during 2025. For the full year, 54% of all new leasing signed in these markets was at a Brandywine property. More importantly, though, since 2021, our net effective rents in these submarkets have increased almost 20%, or an annual net effective rent increase of 5.4%. This net effective rent growth was achieved through sustained controlling capital costs and continued rent growth. In the Pennsylvania suburbs, overall, we're 89.4% leased, and our Radnor submarket is 91% leased. We continue to see solid levels of pipeline prospects for the existing vacancies.
Gerard H. Sweeney: Interesting data points: Over the last five years, Brandywine has captured 30% market share of all new leasing activity signed in Market West and University City, substantially outperforming our 15% market share. This trend accelerated during 2025. For the full year, 54% of all new leasing signed in these markets was at a Brandywine property. More importantly, though, since 2021, our net effective rents in these submarkets have increased almost 20%, or an annual net effective rent increase of 5.4%. This net effective rent growth was achieved through sustained controlling capital costs and continued rent growth. In the Pennsylvania suburbs, overall, we're 89.4% leased, and our Radnor submarket is 91% leased. We continue to see solid levels of pipeline prospects for the existing vacancies.
More importantly though, since 2021, our net effective rents in these sub-markets have increased almost 20% or an annual net effective rent, increase of 5.4%.
This net effect of rank growth is achieved through sustaining uh through sustained, controlling Capital costs and continued rank growth.
Speaker #2: This trend accelerated during market share. 2025. For the full year, 54% of all new leasing signed in these markets was at a Brandywine property.
In the Pennsylvania. Suburbs overall. We're 89.4% leased and our Ratner submarket is 91% least. We continue to see solid levels of pipeline prospects for the existing vacancies.
Speaker #2: More importantly, though, since 2021, our net effective rents in these submarkets have increased almost 20%, or an annual net effective rent increase of 5.4%.
Austin at 74% occupancy is creating a 400 basis point drop in overall company, leasing levels, but tour volume, there was a was up over 100% year-over-year and other side of that market being on the slow path to recovery.
Speaker #2: This net effective rent growth was achieved through sustaining, through sustained controlling capital costs and continued rent growth. In the Pennsylvania suburbs, overall, we're 89.4% leased, and our Radner submarket is 91% leased.
Our operating portfolio leasing pipeline remains solid at 1.5 million square ft, which also includes about 140,000 square feet in advanced stages of negotiations.
Speaker #2: We continue to see solid levels of pipeline prospects for the existing vacancies. Austin, at 74% occupancy is creating a 400 basis point drop in overall company leasing levels, but tour volume there was was up over 100% year over year and another sign of that market being on a slow path to recovery.
Relative to liquidity. We're in solid shape with no outstanding balance or a lot on a 600 million dollar unsecured line of credit and 32 million dollars of cash on hand at the end of the quarter.
Thomas Wirth: Austin, at 74% occupancy, is creating a 400 basis point drop in overall company leasing levels, but tour volume there was up over 100% year over year, another sign of that market being on the slow path to recovery. Our operating portfolio leasing pipeline remains solid at 1.5 million sq ft, which also includes about 140,000 sq ft in advanced stages of negotiations. Relative to liquidity, we're in solid shape with no outstanding balance on our $600 million unsecured line of credit and $32 million of cash on hand at the end of the quarter. We also have no unsecured bonds maturing until November of 2027. As noted previously, we plan to maintain minimal balances on our line of credit, as our business plan is designed to return us to investment-grade metrics. As we'll discuss, our 2026 plan will reduce overall levels of leverage.
Gerard H. Sweeney: Austin, at 74% occupancy, is creating a 400 basis point drop in overall company leasing levels, but tour volume there was up over 100% year over year, another sign of that market being on the slow path to recovery. Our operating portfolio leasing pipeline remains solid at 1.5 million sq ft, which also includes about 140,000 sq ft in advanced stages of negotiations. Relative to liquidity, we're in solid shape with no outstanding balance on our $600 million unsecured line of credit and $32 million of cash on hand at the end of the quarter. We also have no unsecured bonds maturing until November of 2027. As noted previously, we plan to maintain minimal balances on our line of credit, as our business plan is designed to return us to investment-grade metrics. As we'll discuss, our 2026 plan will reduce overall levels of leverage.
We also have no unsecured bonds, maturing until November of 2027.
Speaker #2: Our operating portfolio leasing pipeline remains solid at 1.5 million square feet. Which also includes about 140,000 square feet in advanced stages of negotiations. Relative to liquidity, we're in solid shape with no outstanding balance in our lot on a $600 million unsecured line of credit, and $32 million of cash on hand at the end of the quarter.
And as noted previously, we plan to maintain minimal balances on our line of credit. As our business plan is designed to return us to investment grade metrics as we'll discuss. Our 26 plan will reduce overall levels of Leverage. But as an interesting point over 50% of our outstanding, bonds has coupons north of 8% providing, very good Finance refinancing opportunities over the next several years. Assuming the market remains constructive uh, as an illustrative point. If we refinance those
Speaker #2: We also have no unsecured bonds maturing until November of 2027. And as noted previously, we plan to maintain minimal balances on our line of credit, as our business plan is designed to return us to investment-grade metrics.
Those bonds over 8% to market rate. Today, are interest rate costs would decrease approximately 10 cents per share.
Speaker #2: As we'll discuss, our 26 plan will reduce overall levels of leverage, but as an interesting point, over 50% of our outstanding bonds has coupons north of 8%, providing very good finance refinancing opportunities over the next several years assuming the market remains constructive.
Thomas Wirth: But as an interesting point, over 50% of our outstanding bonds has coupons north of 8%, providing very good refinancing opportunities over the next several years, assuming the market remains constructive. As an illustrative point, if we refinance those bonds over 8% to market rate today, our interest rate costs would decrease approximately $0.10 per share. As we look at the year-end results, our FFO for the quarter and year were both in line with consensus. Then, notably, during the Q4, we took our first steps towards recapitalizing our development joint ventures. In December, we redeemed our preferred partner's equity interests in both joint ventures at Schuylkill Yards. Our 3025 JFK property, what a high-quality asset, onto our balance sheet, with a major tenant already taking occupancy in early January.
Gerard H. Sweeney: But as an interesting point, over 50% of our outstanding bonds has coupons north of 8%, providing very good refinancing opportunities over the next several years, assuming the market remains constructive. As an illustrative point, if we refinance those bonds over 8% to market rate today, our interest rate costs would decrease approximately $0.10 per share. As we look at the year-end results, our FFO for the quarter and year were both in line with consensus. Then, notably, during the Q4, we took our first steps towards recapitalizing our development joint ventures. In December, we redeemed our preferred partner's equity interests in both joint ventures at Schuylkill Yards. Our 3025 JFK property, what a high-quality asset, onto our balance sheet, with a major tenant already taking occupancy in early January.
Speaker #2: as an illustrative point, if we refinance those bonds over 8% to market rate today, our interest rate costs would decrease approximately 10 cents per share.
Uh, as we look at the the year end results are ffo for the quarter and year were both in line with consensus. And then notably during the fourth quarter, we took our first steps towards a recap. Capitalizing our development joint ventures in December, we redeemed our preferred Partners Equity interest in both joint ventures at Schuylkill, yards. Our 3025 JFK property, bought a high quality asset onto our balance sheet with the major tenant. Occup already taken occupants in early January,
Speaker #2: As we look at the year-end results, our FFO for the quarter and year were both in line with consensus. And then, notably, during the fourth quarter, we took our first steps towards recapitalizing our development joint ventures.
Speaker #2: In December, we redeemed our preferred partner's equity interest in both joint ventures at Schuylkill Yards. Our 30, 25 JFK property bought a high-quality asset onto our balance sheet with a major tenant already taken occupants in early January.
Speaker #2: the 30, 25 commercial component will be added to our core portfolio in the first quarter at 92% leased. Our BIDE on 3151, which aggregated about 65.7 million dollars, was mostly funded with a $50 million CPACE loan which effectively replaced our higher-priced partner's equity with a lower-priced loan with prepayment flexibility.
Thomas Wirth: The 3025 commercial component will be added to our core portfolio in Q1 at 92% leased. Our BIDON 3151, which aggregated about $65.7 million, was mostly funded with a $50 million CPACE loan, which effectively replaced our higher-priced partner's equity with a lower-priced loan with prepayment flexibility. As we've noted before, the capitalization phase in this building ended at the end of 2025. Our pipeline in this project stands at approximately 1 million sq ft, broken down to 60% office and 40% life science. Discussions with many prospects remain active, and several key proposals are outstanding. Both of these buyouts temporarily increased our year-end leverage in anticipation of the 2035 construction loan refinancing, and our asset sales program. Notably, the Q4 BIDON 3025 occurred in advance of our lead tenant-taking occupancy.
Gerard H. Sweeney: The 3025 commercial component will be added to our core portfolio in Q1 at 92% leased. Our BIDON 3151, which aggregated about $65.7 million, was mostly funded with a $50 million CPACE loan, which effectively replaced our higher-priced partner's equity with a lower-priced loan with prepayment flexibility. As we've noted before, the capitalization phase in this building ended at the end of 2025. Our pipeline in this project stands at approximately 1 million sq ft, broken down to 60% office and 40% life science. Discussions with many prospects remain active, and several key proposals are outstanding. Both of these buyouts temporarily increased our year-end leverage in anticipation of the 2035 construction loan refinancing, and our asset sales program. Notably, the Q4 BIDON 3025 occurred in advance of our lead tenant-taking occupancy.
Uh, the 3025 commercial component will be added to our core portfolio in the first quarter at 92%. At least our bid on 3151 which agreed about 65.7. Million dollars was mostly funded with a fifty million dollar. Cpace loan, which effectively replaced, our higher price Partners Equity with a lower price loan with prepayment flexibility as we've noted before the capitalization phase in this building ended at the end of 2025 our Pipeline. On this project stands at approximately a million square feet, broken down to 60% office and 40% life science.
discussions with many prospects, remain, active and several key proposals are outstanding
Speaker #2: As we've noted before, the capitalization phase in this building ended at the end of 2025. Our pipeline on this project stands at approximately a million square feet.
Both of these buyouts temporarily increased, our year-end leverage in anticipation of the 35 construction loan refinancing and our asset sales program, notably the fourth quarter Biden. And 3025 occurred in advance of our lead tenant taking occupancy proformer for that Revenue stream, which did commence this month. Our net debt to ibida would improve by 4/10 of a turn and our fixed charge by 2/10 of a turn.
Speaker #2: Broken down to 60% office and 40% life science. Discussions with many prospects remain active, and several key proposals are outstanding. Both of these buyouts temporarily increased our year-end leverage in anticipation of the 35 construction loan refinancing and our asset sales program.
As a result of these buyouts at Schuylkill yards or remaining joint venture development projects are 1 Uptown and Solaris in Austin.
Speaker #2: Notably, the fourth quarter BIDE on 3025 occurred in advance of our lead tenant taking occupancy pro forma for that revenue stream, which did commence this month.
Thomas Wirth: Pro forma for that revenue stream, which did commence this month, our net debt to EBITDA would improve by 0.4 of a turn and our fixed charge by 0.2 of a turn. As a result of these buyouts at Schuylkill Yards, our remaining joint venture development projects are One Uptown and Solaris in Austin. At Uptown ATX, at One Uptown, we are now 55% leased, up from 40% last call. But we do have an additional 20,000 sq ft, or 8%, of leases out for execution, which would bring us to 63%. The pipeline remains strong, with tenant sizes ranging from 5,000 to 60,000 sq ft. Solaris, as we noted, is 98% occupied and 99% leased. We are seeing significantly improved economics on lease renewals. In fact, our renewals since 1 November all achieved an average I'm sorry, 12.7% effective rent growth.
Gerard H. Sweeney: Pro forma for that revenue stream, which did commence this month, our net debt to EBITDA would improve by 0.4 of a turn and our fixed charge by 0.2 of a turn. As a result of these buyouts at Schuylkill Yards, our remaining joint venture development projects are One Uptown and Solaris in Austin. At Uptown ATX, at One Uptown, we are now 55% leased, up from 40% last call. But we do have an additional 20,000 sq ft, or 8%, of leases out for execution, which would bring us to 63%. The pipeline remains strong, with tenant sizes ranging from 5,000 to 60,000 sq ft. Solaris, as we noted, is 98% occupied and 99% leased. We are seeing significantly improved economics on lease renewals. In fact, our renewals since 1 November all achieved an average I'm sorry, 12.7% effective rent growth.
Speaker #2: Our net debt to EBITDA would improve by four-tenths of a turn and our fixed charge by two-tenths of a turn. As a result of these buyouts at Schuylkill Yards, our remaining joint venture development projects are one-uptown and Solaris in Austin.
Pieces out for execution, which would bring us to 63%, the pipeline, remains strong with 10 in sizes. Ranging from 5, 500 to 60,000 square feet.
Speaker #2: At uptown ATX, at one-uptown, we are now 55% leased, up from 40% last call. But we do have an additional 20,000 square feet or 8% of leases out for execution, which would bring us to 63%.
Solaris, as we noted is 98% occupied and 99% least. We are seeing significantly improved economics on lease renewals in fact our renewals since November 1st. Uh, it's all achieved an average. I'm sorry 12.7%. Effective rank growth.
Speaker #2: The pipeline remains strong with tenant sizes ranging from 5,000 to 60,000 square feet. Solaris, as we noted, is 98% occupied and 99% leased. We are seeing significantly improved economics on lease renewals.
Speaker #2: In fact, our renewals since November 1st all achieved an average—I'm sorry—12.7% effective rent growth. Looking at one-uptown, with the outstanding lease being executed and at 63%, we have three floors available.
Looking at 1 Uptown with the outstanding lease being executed and it's 63%. We have 3, floors available. Uh, the 12th floor is subject to an extension, right by our lead tenant where we'll receive notice in July. Also, since you had great success on the seventh floor, which is 100% least that the 10th floor is under construction which was for spec Suites, which leaves the 11th floor at 43,000 square feet, uh the primary target for uh for the larger tenant basis right now.
Thomas Wirth: Looking at One Uptown, with the outstanding lease being executed and at 63%, we have three floors available. The 12th floor is subject to an extension right by our lead tenant, where we'll receive notice in July. Also, since we had great success on the 7th floor, which is 100% leased, the 10th floor is under construction for spec suites, which leaves the 11th floor at 43,000 sq ft the primary target for the larger tenant bases right now. Looking at the investment market, we continue to see a strong improvement in that market, both in terms of velocity and pricing. For example, on a project recently marketed, over 90 CAs were signed. We had 20+ tours and a strong bid response from the buying pool. Buying pools, we're seeing, consist of high-net-worth family offices, operators with private capital, and the reemergence of institutional-quality buyers.
Gerard H. Sweeney: Looking at One Uptown, with the outstanding lease being executed and at 63%, we have three floors available. The 12th floor is subject to an extension right by our lead tenant, where we'll receive notice in July. Also, since we had great success on the 7th floor, which is 100% leased, the 10th floor is under construction for spec suites, which leaves the 11th floor at 43,000 sq ft the primary target for the larger tenant bases right now. Looking at the investment market, we continue to see a strong improvement in that market, both in terms of velocity and pricing. For example, on a project recently marketed, over 90 CAs were signed. We had 20+ tours and a strong bid response from the buying pool. Buying pools, we're seeing, consist of high-net-worth family offices, operators with private capital, and the reemergence of institutional-quality buyers.
Speaker #2: the 12th floor is subject to an extension right by our lead tenant, where we'll receive notice in July. Also, since we had great success on the 7th floor, which is 100% leased, the 10th floor is under construction for spec suites, which leaves the 11th floor at 43,000 square feet, the primary target for, for the larger tenant basis right now.
Uh, looking at the investment Market, we continue to see a strong Improvement in the in that market, both in terms of velocity and pricing, for example, in a project recently marketed over 90 uh, casts were signed we had over. We had 20 plus tours and a strong bid response from the buying pool. Buying pools were saying consists of high, net worth family, offices, operators with private capital and
And the re-emergence of institutional quality buyers. And as we noted previously, for 2025, we did exceed our our, uh, our sale Target.
Turning to 26.
Speaker #2: looking at the investment market, we continue to see, strong improvement in that market, both in terms of velocity and pricing. For example, in a project recently marketed, over 90 CAs were signed.
our 2026 business plan can really be summarized as a return to earnings growth,
a continuation of solid operating results.
Speaker #2: We had over—we had 20-plus tours and a strong bid response from the buying pool. Buying pools we're seeing consist of high net worth family offices, operators with private capital, and the re-emergence of institutional quality buyers.
Continued, Chris focus on stabilizing 1, Uptown and 3151
And accelerated sales program to both pay down debt and further, refine our portfolio with corresponding balance sheet improvements.
Speaker #2: And as we noted previously, for 2025, we did exceed our sale target. Turning to 26, our 2026 business plan can really be summarized as a return to earnings growth, a continuation of solid operating results, continued crisp focus on stabilizing one-uptown and 3151, and accelerated sales program to both pay down debt and further refine our portfolio, with corresponding balance sheet improvements.
Thomas Wirth: As we noted previously, for 2025, we did exceed our sale target. Turning to 2026, our 2026 business plan can really be summarized as a return to earnings growth, a continuation of solid operating results, continued crisp focus on stabilizing One Uptown and 3151, an accelerated sales program to both pay down debt and further refine our portfolio with corresponding balance sheet improvements. From an operating perspective, our 2026 business plan is very straightforward, highlighted by solid core portfolio performance and strong leasing activity. We are providing 2026 FFO guidance with a range of $0.51 to $0.59 per share, for a midpoint of $0.55. At that midpoint, our 2025 FFO represents a 5.8% growth rate over—I'm sorry, our 2026 FFO represents a 5.8% increase over 2025 FFO.
Gerard H. Sweeney: As we noted previously, for 2025, we did exceed our sale target. Turning to 2026, our 2026 business plan can really be summarized as a return to earnings growth, a continuation of solid operating results, continued crisp focus on stabilizing One Uptown and 3151, an accelerated sales program to both pay down debt and further refine our portfolio with corresponding balance sheet improvements. From an operating perspective, our 2026 business plan is very straightforward, highlighted by solid core portfolio performance and strong leasing activity. We are providing 2026 FFO guidance with a range of $0.51 to $0.59 per share, for a midpoint of $0.55. At that midpoint, our 2025 FFO represents a 5.8% growth rate over—I'm sorry, our 2026 FFO represents a 5.8% increase over 2025 FFO.
From an operating perspective. Our 2026 business plan is very straightforward highlighted by solid core portfolio, performance and strong leasing activity. We are providing 26 ffo Guidance with a range of 51 to 59 cents per share for midpoint of 55 cents and at that midpoint. Uh, our 25 foe is a is a represents a 5.8% growth rate over I'm sorry. A 26. Ffo represents a 5.8% increase over 25 pho.
Speaker #2: perspective, our From an operating 2026 business plan is very straightforward, highlighted by solid core portfolio performance and strong leasing activity. We are providing 26 FFO guidance with a range of 51 to 59 cents per share for midpoint of 55 cents, and at that midpoint, our 25 FFO is, is represents a 5.8% growth rate over—I'm sorry—a 26 FFO represents a 5.8% increase over 25 FFO.
The primary drivers of this are highlighted in the ffo reconciliation, which is found on page 1 of our sip which time we'll review in more detail.
Notably, our midpoint does not factor in the benefit of any of the Austin development recap.
Uh, improvements. As we looked at the year, G&A expense would be lower due to lower compensation costs and related cost control measures
improving operations in our development joint, ventures and the bid of our partners at 3025 and 3151
Speaker #2: The primary drivers of this are highlighted in the FFO reconciliation, which is found on page one of our SIP, which Tom will review in more detail.
Thomas Wirth: The primary drivers of this are highlighted in the FFO reconciliation, which is found on page 1 of our SIP, which Tom will review in more detail. Notably, our midpoint does not factor in the benefit of any of the Austin development recap improvements, as we looked at the year, G&A expense will be lower due to lower compensation costs and related cost control measures, improving operations in our development joint ventures, and the buy-in of our partners at 3025 and 3151. Wholly-owned GAAP NOI will increase primarily from the consolidation of 3025, and we do not expect any early retirement or extinguishment costs of debt. Reductions include higher interest expense, primarily due to the consolidation of the 3025 construction loan, and lower capitalized interest due to the end of the capitalization period of 3151.
Gerard H. Sweeney: The primary drivers of this are highlighted in the FFO reconciliation, which is found on page 1 of our SIP, which Tom will review in more detail. Notably, our midpoint does not factor in the benefit of any of the Austin development recap improvements, as we looked at the year, G&A expense will be lower due to lower compensation costs and related cost control measures, improving operations in our development joint ventures, and the buy-in of our partners at 3025 and 3151. Wholly-owned GAAP NOI will increase primarily from the consolidation of 3025, and we do not expect any early retirement or extinguishment costs of debt. Reductions include higher interest expense, primarily due to the consolidation of the 3025 construction loan, and lower capitalized interest due to the end of the capitalization period of 3151.
Uh, wholly owned Gap, Knee will increase primarily from the consolidation of 3025 and we do not expect any early retirement of of of debt, extinguished costs of debt.
Speaker #2: Notably, our midpoint does not factor in the benefit of any of the Austin development recap. improvements, as we looked at the year, G&A expense will be lower due to, lower compensation costs and related cost control measures.
reductions include higher interest expense expense primarily due to the consolidation of the
Speaker #2: Improving operations in our development joint ventures and the BIDE of our partners at 3025 and 3151. Wholly owned gap NOI will increase primarily from the consolidation of 3025, and we do not expect any early retirement of debt—extinguished costs of debt.
Uh, 3025, construction loan, and lower capitalized, interest due to the end of the capitalization period of 3151, obviously, with the joint ventures, uh, uh, uh, at Google yards disappearing, we'll have lower third-party management and development fees, but time will review those items and several factors in more detail.
From an operating standpoint, the core portfolio will add 3025 in the first quarter and 250 rder in the second quarter.
Speaker #2: Reductions include higher interest expense, primarily due to the consolidation of the 3025 construction loan, and lower capitalized interest due to the end-of-the-capitalization period of 3151.
Speaker #2: Obviously, with the joint ventures at Schuylkill Yards disappearing, we'll have lower third-party management and development fees. But Tom will review those items and several factors in more detail.
Thomas Wirth: Obviously, with the joint ventures at Schuylkill Yards disappearing, we'll have lower third-party management and development fees. But Tom will review those items, and several factors in more detail. From an operating standpoint, the core portfolio will add 3025 in Q1 and 250 Radnor in Q2. Spec revenue, we've targeted between $17 to 18 million. While down from 2025 levels, spec revenue from new lease transactions is up 39% from 2025 levels. We are currently almost $13 million, or 75%, done at the midpoint, with healthy pipelines across the board. We do project that our year-end occupancy will improve 120 basis points from 2025 levels. Based on this, we do project positive net absorption for the first time in several years as another evidence of an improving market.
Gerard H. Sweeney: Obviously, with the joint ventures at Schuylkill Yards disappearing, we'll have lower third-party management and development fees. But Tom will review those items, and several factors in more detail. From an operating standpoint, the core portfolio will add 3025 in Q1 and 250 Radnor in Q2. Spec revenue, we've targeted between $17 to 18 million. While down from 2025 levels, spec revenue from new lease transactions is up 39% from 2025 levels. We are currently almost $13 million, or 75%, done at the midpoint, with healthy pipelines across the board. We do project that our year-end occupancy will improve 120 basis points from 2025 levels. Based on this, we do project positive net absorption for the first time in several years as another evidence of an improving market.
Spec Revenue, we've targeted between 17 to 18 million uh dollars. While down from 25 levels, spec revenue from new lease transactions is up 39% from 25 levels. We are currently almost 13 million dollars or 75% done at the midpoint with healthy pipelines across the board. We do
Speaker #2: From an operating standpoint, the core portfolio will add 3025 in the first quarter and 250 Radner in the second quarter. Spec revenue, we've targeted between 17 to 18 million dollars.
Projected, our year-end occupancy will improve 120 basis points from 2025 levels. And we based on this, we do project positive, net absorption for the first time in several years as another evidence, uh, of of an improving Market.
Speaker #2: While down from 25 levels, spec revenue from new lease transactions is up 39% from 25 levels. We are currently almost 13 million dollars or 75% done at the midpoint, with healthy pipelines across the board.
Speaker #2: We do project that our year-end occupancy will improve 120 basis points from 2025 levels, and we—based on this, we do project positive net absorption for the first time in several years as another evidence, of an improving market.
PA suburbs, leasing Capital will be slightly above our 25 levels, at a target range of 12 to 13%. Again, that's primarily due to a higher composition of new lease. Transactions, same store growth will range between a negative 1 and a positive 1 and a gap basis and 0 to 2% on a cash basis.
Speaker #2: Gap mark-to-market will range between 5 and 7%, led by an 8 to 10% mark-to-market in CBD in the Pennsylvania suburbs. Cash mark-to-market will be between a negative 2 to 0, again led by a positive mark-to-market in the CBD and PA suburbs.
Thomas Wirth: GAAP mark-to-market will range between 5% and 7%, led by an 8% to 10% mark-to-market in CBD and the Pennsylvania suburbs. Cash mark-to-market will be between -2% to 0%, again led by a positive mark-to-market in the CBD and PA suburbs. Leasing capital will be slightly above our 2025 levels, at a target range of 12% to 13%. Again, that's primarily due to a higher composition of new lease transactions. Same-store growth will range between -1% and 1% on a GAAP basis and 0% to 2% on a cash basis. From a capital markets perspective, we plan to repay the 3025 construction loan with lower-priced debt. We expect about a 200 basis point savings there. We're also evaluating, as part of that, a secured financing on that residential component and then adding the office portion to our unencumbered asset pool.
Gerard H. Sweeney: GAAP mark-to-market will range between 5% and 7%, led by an 8% to 10% mark-to-market in CBD and the Pennsylvania suburbs. Cash mark-to-market will be between -2% to 0%, again led by a positive mark-to-market in the CBD and PA suburbs. Leasing capital will be slightly above our 2025 levels, at a target range of 12% to 13%. Again, that's primarily due to a higher composition of new lease transactions. Same-store growth will range between -1% and 1% on a GAAP basis and 0% to 2% on a cash basis. From a capital markets perspective, we plan to repay the 3025 construction loan with lower-priced debt. We expect about a 200 basis point savings there. We're also evaluating, as part of that, a secured financing on that residential component and then adding the office portion to our unencumbered asset pool.
From a capital markets perspective, we plan to repay the 3025 construction loan with lower price debt. We expect about a 200 basis points savings there. We're also evaluating as part of that is secured financing on that residential component and then adding the office portion to our unencumbered asset pool.
Speaker #2: Leasing capital will be slightly above our 25 levels at a target range of 12 to 13%, again that's primarily due to a higher composition of new lease transactions.
Our business plan projects, between 280 to 300 million dollars of sales activity. We anticipate average cap rates around at cap rates, averaging around 8%
Speaker #2: Same-store growth will range between negative 1% and positive 1% on a GAAP basis, and 0% to 2% on a cash basis. From a capital markets perspective, we plan to repay the 3025 construction loan with lower-priced debt.
We anticipate closing a majority of these sales during the first half of the year, we currently have approximately a hundred million dollars with Buyers selected and advancing towards agreement of sales and have a number of other properties in the market across all of our submarkets.
Speaker #2: We expect about a 200-basis-point savings there. We're also evaluating—as part of that is secured financing—on that residential component, and then adding the office portion to our unencumbered asset pool.
The vast majority of sales proceeds, will be used to reduce debt and continue to improve liquidity and all of our credit metrics.
Speaker #2: Our business plan projects between 280 to 300 million dollars of sales activity. We anticipate average cap rates around—cap rates averaging around 8%. We anticipate closing a majority of these sales during the first half of the year.
Thomas Wirth: Our business plan projects between $280 to $300 million of sales activity. We anticipate average cap rates averaging around 8%. We anticipate closing a majority of these sales during the first half of the year. We currently have approximately $100 million with buyers selected and advancing towards agreement of sales, and have a number of other properties in the market across all of our submarkets. The vast majority of sale proceeds will be used to reduce debt, and continue to improve liquidity, and all of our credit metrics. And while that primary focus is lowering leverage as a top priority, given that our stock remains significantly undervalued, we anticipate, based upon the velocity of the sales program we have underway, to repurchase our shares while continuing to lower leverage. We do have availability under our existing share purchase program.
Gerard H. Sweeney: Our business plan projects between $280 to $300 million of sales activity. We anticipate average cap rates averaging around 8%. We anticipate closing a majority of these sales during the first half of the year. We currently have approximately $100 million with buyers selected and advancing towards agreement of sales, and have a number of other properties in the market across all of our submarkets. The vast majority of sale proceeds will be used to reduce debt, and continue to improve liquidity, and all of our credit metrics. And while that primary focus is lowering leverage as a top priority, given that our stock remains significantly undervalued, we anticipate, based upon the velocity of the sales program we have underway, to repurchase our shares while continuing to lower leverage. We do have availability under our existing share purchase program.
Speaker #2: We currently have approximately 100 million dollars with buyers selected, and advancing towards agreement of sales and have a number of other properties in the market across all of our submarkets.
And while that primary focus is lowering leverage as a top priority given that our stock remains significantly undervalued. We anticipate based upon the velocity of the sails program we have underway to repurchase our shares. While Le while continuing to lower leverage, we do have availability under our existing, share purchase program.
Speaker #2: The vast majority of sale proceeds will be used to reduce debt and continue to improve liquidity and all of our credit metrics. And while that primary focus is lowering leverage, as a top priority, given that our stock remains significantly undervalued, we anticipate based upon the velocity of the sales program we have underway to repurchase our shares while continuing to lower leverage.
Our sale Target also includes executing several delayed Landscapes land sales, which we anticipate will generate gains, but are not included in our 26 guidance.
Speaker #2: We do have availability under our existing share purchase program. Our sale target also includes executing several delayed land sales. Land sales, which we anticipate will generate gains, are not included in our 2026 guidance.
Thomas Wirth: Our sale target also includes executing several delayed land sales, which we anticipate will generate gains but are not included in our 2026 guidance. Our business plan does contemplate that both One Uptown and Solaris will be recapitalized during the second half of 2026. We could do sooner than that, but right now, the plan is based on the second half of 2026. Those recaps could range from a complete sale or a parapursuit joint venture, where Brandywine remains a minority stake and recovers significant capital to both lower debt attribution and improve overall liquidity. We do project a year-end core net debt to EBITDA to be between 8x and 8.4x.
Gerard H. Sweeney: Our sale target also includes executing several delayed land sales, which we anticipate will generate gains but are not included in our 2026 guidance. Our business plan does contemplate that both One Uptown and Solaris will be recapitalized during the second half of 2026. We could do sooner than that, but right now, the plan is based on the second half of 2026. Those recaps could range from a complete sale or a parapursuit joint venture, where Brandywine remains a minority stake and recovers significant capital to both lower debt attribution and improve overall liquidity. We do project a year-end core net debt to EBITDA to be between 8x and 8.4x.
Speaker #2: Our business plan does contemplate that both one-uptown and Solaris will be recapitalized during the second half of 26. We could do sooner than that, but right now 26.
Speaker #2: the plan is based on the second half of Those recaps could range from a complete sale or a power pursuit joint venture, where Brandywine remains a minority stake and recovers significant capital to both lower debt attribution and improve overall liquidity.
Our business plan does contemplate, that both 1, Uptown and Solaris will be re will be recapitalized during the second half of 26. We could do sooner than that, but right now, the plan is based on the second half of 26, those Recaps could range from a complete sale or a paraphrase Pursuit joint venture, where Brandy Wine remains a minority stake and recovers significant Capital to both lower debt attribution and improve overall liquidity. We do project a year-end, uh, coordinate that the ibida to be between 8 to 8.4 times. And we anticipate, our CAD ratio will between 90 to 70% with the Improvement occurring during the second half of the year. After we fully burn off the remaining tenant Improvement, costs related to leases done between 2020 and 2023. So with that Tom will review our finance results for the fourth quarter and provide more detail on the 26th Outlook.
Speaker #2: We do project a year-end core net debt to EBITDA to be between 8 to 8.4 times, and we anticipate our CAD ratio will be between 90 to 70%, with the improvement occurring during the second half of the year after we fully burn off the remaining tenant improvement costs related to leases done between 2020 and 2023.
Thomas Wirth: We anticipate our CAD ratio will be between 90% to 70%, with the improvement occurring during the second half of the year after we fully burn off the remaining tenant improvement costs related to leases done between 2020 and 2023. So, with that, Tom will review our financial results for the Q4 and provide more detail in the 2026 outlook. Thank you, Jerry, and good morning. Our Q4 net loss was $36.9 million, or $0.21 per share. Our Q4 FFO totaled $14.6 million, or $0.08 per diluted share, and in line with consensus estimates. Both quarterly results were impacted by a one-time charge for the early extinguishment of a CMVS loan totaling $12.2 million, or roughly $0.07 per share.
Gerard H. Sweeney: We anticipate our CAD ratio will be between 90% to 70%, with the improvement occurring during the second half of the year after we fully burn off the remaining tenant improvement costs related to leases done between 2020 and 2023. So, with that, Tom will review our financial results for the Q4 and provide more detail in the 2026 outlook.
Speaker #2: So with that, Tom will review our finance results for the fourth quarter and provide more detail in the 26 outlook.
Thomas E. Wirth: Thank you, Jerry, and good morning. Our Q4 net loss was $36.9 million, or $0.21 per share. Our Q4 FFO totaled $14.6 million, or $0.08 per diluted share, and in line with consensus estimates. Both quarterly results were impacted by a one-time charge for the early extinguishment of a CMVS loan totaling $12.2 million, or roughly $0.07 per share.
Speaker #1: Thank you, Gerry, and good morning. Our fourth quarter net loss was 36.9 million dollars or 21 cents per share. Our fourth quarter FFO totaled 14.6 million, or 8 cents per diluted share, and in line with consensus estimates.
Both quarterly results were impacted by a 1-time charge for the early extinguishment of a cmbs, loan totaling, 12.2 million, or roughly 7 cents per share, some general observations from the fourth quarter property level. Noi was 70 million or 1 million below our forecast primarily due to increase operating costs across the portfolio, ffo contribution from our unconsolidated joint ventures total, 0.6 million or 1.4 million better than our projections. They Improvement was primarily due to the improved operations of Commerce Square 8 at ATX office and Solaris.
Speaker #1: Both quarterly results were impacted by a one-time charge for the early extinguishment of a CMVS loan totaling 12.2 million, or roughly 7 cents per share.
Speaker #1: Some general observations from the fourth quarter: property-level NOI was $70 million, or $1 million below our forecast, primarily due to increased operating costs across the portfolio.
Thomas Wirth: Some general observations from the Q4: Property level NOI was $70 million, or $1 million below our forecast, primarily due to increased operating costs across the portfolio. FFO contribution from our unconsolidated joint ventures totaled $0.6 million, or $1.4 million better than our projected. The improvement was primarily due to the improved operations at Commerce Square, ATX office, and Solaris. G&A expense was below our reforecast by $0.6 million, primarily due to lower compensation expense. Net interest expense was $0.7 million higher, primarily due to the inclusion of JFK's loan, 3025 JFK's loan partially offset by higher-than-anticipated capitalized interest. Our other forecasted quarterly results were generally in line. Looking at our debt metrics, Q4 debt service and interest rate coverage ratios were 1.8, both below the third quarter levels. Our third quarter annualized combined and core net debt to EBITDA were 8.8x and 8.4x, respectively.
Thomas E. Wirth: Some general observations from the Q4: Property level NOI was $70 million, or $1 million below our forecast, primarily due to increased operating costs across the portfolio. FFO contribution from our unconsolidated joint ventures totaled $0.6 million, or $1.4 million better than our projected. The improvement was primarily due to the improved operations at Commerce Square, ATX office, and Solaris. G&A expense was below our reforecast by $0.6 million, primarily due to lower compensation expense. Net interest expense was $0.7 million higher, primarily due to the inclusion of JFK's loan, 3025 JFK's loan partially offset by higher-than-anticipated capitalized interest. Our other forecasted quarterly results were generally in line. Looking at our debt metrics, Q4 debt service and interest rate coverage ratios were 1.8, both below the third quarter levels. Our third quarter annualized combined and core net debt to EBITDA were 8.8x and 8.4x, respectively.
Speaker #1: FFO contribution from our unconsolidated joint ventures totaled $0.6 million, or $1.4 million better than our projected; the improvement was primarily due to improved operations at Commerce Square.
Uh, GNA expense was below, a reforest by, uh, 0.6 million primarily due to lower compensation expense. Net interest expense was 0.7 million higher, primarily due to the uh, inclusion of JFK's loan, uh, 3025 JFK's loan, partially offset by higher, uh, than anticipated, capitalized interest and our other forecasts, a quarter of the results, were generally in line.
Speaker #1: ATX office and Solaris. G&A expense was below our reforecast by $0.6 million, primarily due to lower compensation expense. Net interest expense was $0.7 million higher, primarily due to the inclusion of JFK's loan, 3025 JFK's loan, partially offset by higher-than-anticipated capitalized interest.
Speaker #1: And our other forecasted quarterly results were generally in line. Looking at our debt metrics, fourth quarter debt service and interest rate coverage ratios were 1.8.
Speaker #1: Both below the third quarter levels. Our third quarter annualized combined and core net debt to EBITDA were 8.8 and 8.4 respectively, both metrics were also above our business plan ranges.
Thomas Wirth: Both metrics were also above our business plan ranges. These metrics were negatively impacted by our Q4 preferred equity partner buyouts totaling $136 million, which retired higher-priced capital but was funded by lower-priced debt. As we highlighted, we anticipate 2026 sales to reduce and reducing our ownership in Uptown ATX will offset these increases. Of note, our consolidation of 3025 JFK occurred before the first quarter stabilization for contractual leases, which increased our combined net debt by 0.4 turns and our fixed charge by 0.2, otherwise placing both metrics within the stated targets. We continue to maintain a solid liquidity position with $32 million of cash on hand and no outstanding balance on our unsecured line of credit as of the end of the year. Looking at 2026 guidance, regarding guidance, at the midpoint, our net loss is projected to be $0.62 per share.
Thomas E. Wirth: Both metrics were also above our business plan ranges. These metrics were negatively impacted by our Q4 preferred equity partner buyouts totaling $136 million, which retired higher-priced capital but was funded by lower-priced debt. As we highlighted, we anticipate 2026 sales to reduce and reducing our ownership in Uptown ATX will offset these increases. Of note, our consolidation of 3025 JFK occurred before the first quarter stabilization for contractual leases, which increased our combined net debt by 0.4 turns and our fixed charge by 0.2, otherwise placing both metrics within the stated targets. We continue to maintain a solid liquidity position with $32 million of cash on hand and no outstanding balance on our unsecured line of credit as of the end of the year. Looking at 2026 guidance, regarding guidance, at the midpoint, our net loss is projected to be $0.62 per share.
Speaker #1: These metrics were negatively impacted by our fourth quarter, preferred equity partner buyouts totaling $136 million, which retired higher-priced capital but was funded by lower-priced debt.
Before the first quarter stabilization for contractual leases, which increase our combined, net debt by 0.4 turns and our fixed charge by 0.2, otherwise placing both metrics within the stated targets.
Speaker #1: As we highlighted, we anticipated 2026 sales to reduce and reducing our ownership in uptown ATX. We'll offset these increases. Of note, our consolidation of 3025 JFK occurred before the first quarter stabilization for contractual leases, which increased our combined net debt by 0.4 turns, and our fixed charge by 0.2.
Speaker #1: Otherwise, placing both metrics within the stated targets. We continue to maintain a solid liquidity position with 32 million dollars of cash on hand and no outstanding balance on our unsecured line of credit, as of the end of the year.
Speaker #1: Looking at 2026 guidance, at the midpoint, our net loss is projected to be $0.62 per share. Our 2026 FFO, at the midpoint, will be $0.55 per diluted share, representing a 5.8% increase compared to last year.
Thomas Wirth: Our 2026 FFO at the midpoint will be $0.55 per diluted share, representing a 5.8% increase compared to last year. Operating metrics: Overall portfolio operations are expected to remain very stable, with property-level GAAP NOI totaling $292 million, representing a $13 million net increase compared to 2025. This increase is comprised of the following: 3025 JFK will generate an incremental $17 million as stabilized wholly-owned asset. 2025 asset sales, plus the full impact for that, as well as the Q4 moveouts mentioned last quarter, will total a $7 million NOI decrease. Same-store results will be essentially flat. Our Q4 contribution from the unconsolidated joint ventures will improve from an $11 million loss in 2025 to a $1 million contribution of income in 2026. This improvement is comprised of the 3025 JFK, which is now consolidated and in 2025 had a loss of $11 million, which is now eliminated.
Thomas E. Wirth: Our 2026 FFO at the midpoint will be $0.55 per diluted share, representing a 5.8% increase compared to last year. Operating metrics: Overall portfolio operations are expected to remain very stable, with property-level GAAP NOI totaling $292 million, representing a $13 million net increase compared to 2025. This increase is comprised of the following: 3025 JFK will generate an incremental $17 million as stabilized wholly-owned asset. 2025 asset sales, plus the full impact for that, as well as the Q4 moveouts mentioned last quarter, will total a $7 million NOI decrease. Same-store results will be essentially flat. Our Q4 contribution from the unconsolidated joint ventures will improve from an $11 million loss in 2025 to a $1 million contribution of income in 2026. This improvement is comprised of the 3025 JFK, which is now consolidated and in 2025 had a loss of $11 million, which is now eliminated.
We continue to maintain a solid liquidity position with 32 million of cash on hand and no outstanding balance on our unsecured uh line of credit as of uh the end of the year uh looking at 2026 guidance regarding guidance. Uh, at the midpoint our net loss is projected to be 62 cents per per per share. Our 2026 ffo at the midpoint will be uh 555 cents per diluted, share representing a 5.8% increase compared to last year. Operating metrics. Overall portfolio operations are expected to remain very stable with property level Gap. Noi totaling 292 million representing a 13 million. Net increase compared to 2025. Uh, this increase is comprised of the following. 3025 JFK will generate an incremental 17 million dollars uh as stabilized wholly owned asset, 2025 asset sales uh plus the um full impact for that as well as the
fourth quarter move outs uh mentioned last quarter well total 7 point uh 7 million noi decrease
Speaker #1: Operating metrics overall portfolio operations are expected to remain very stable, with property level cap NOI totaling 292 million dollars, representing a 13 million dollar net increase compared to 2025.
Same store results will be essentially flat.
Our fourth quarter contribution from the unconsolidated joint ventures will improve.
Speaker #1: This increase is comprised of the following: 3025 JFK will generate an incremental 17 million dollars, as stabilized wholly owned asset. 2025 asset sales plus the full impact for that, as well as the fourth quarter move-outs, mentioned last quarter, will total 7.7 million dollar NOI decrease.
Speaker #1: Same store results will be essentially flat. Our fourth quarter contribution from the unconsolidated joint ventures will improve from an 11 million dollar loss in 2025 to a 1 million dollar contribution of income in 2026.
Speaker #1: This improvement is comprised of the 3025 JFK, which is now consolidated, and in 2025 had a loss of 11 million dollars. Which is now eliminated.
From an 11 million loss in 2025 to a $1 million contribution of income in 2026. This Improvement is comprised of the 20 3025 JFK, which is now Consolidated and in 2025 have a loss of 11 million which is now eliminated. ATX developments with continued lease up at 1 Uptown and reduced rent concessions at Solaris, we expect a $9 million Improvement as compared to 2025 305 3151 partially offsetting. These improvements was uh a 1-time item for 7.5 million or 4 cents. A share that we took as a tax credit gain in the first quarter of 25 that I that will not uh repeat
Speaker #1: ATX developments, with continued lease-up at One-Uptown and reduced rent concessions at Solaris, we expect a $9 million improvement as compared to 2025. Partially offsetting these improvements was a one-time item for $7.5 million, or $0.04 a share, that we took as a tax credit gain in the first quarter of '25 that will not repeat.
Thomas Wirth: ATX developments, with continued lease-up at One Uptown and reduced rent concessions at Solaris, we expect a $9 million improvement as compared to 2025. 3151, partially offsetting these improvements, was a one-time item for $7.5 million, or $0.04 a share, that we took as a tax credit gain in the first quarter of 2025 that will not repeat. G&A will be $36 to 37 million, which is $5.5 million below our full-year 2025 results. This reduction is primarily due to a decrease in compensation expense, including incentive compensation. Total interest expense, including $5.5 million of deferred financing costs and $2 million of capitalized interest, will approximate $170 million and, at the midpoint, a $30 million increase compared to 2025. The increase is primarily due to the capitalized interest, which will increase $10 million, primarily related to 3151 becoming operational on 1 January 2026.
Thomas E. Wirth: ATX developments, with continued lease-up at One Uptown and reduced rent concessions at Solaris, we expect a $9 million improvement as compared to 2025. 3151, partially offsetting these improvements, was a one-time item for $7.5 million, or $0.04 a share, that we took as a tax credit gain in the first quarter of 2025 that will not repeat. G&A will be $36 to 37 million, which is $5.5 million below our full-year 2025 results. This reduction is primarily due to a decrease in compensation expense, including incentive compensation. Total interest expense, including $5.5 million of deferred financing costs and $2 million of capitalized interest, will approximate $170 million and, at the midpoint, a $30 million increase compared to 2025. The increase is primarily due to the capitalized interest, which will increase $10 million, primarily related to 3151 becoming operational on 1 January 2026.
Uh, GNA will be 36 to 37 million, which is a is 5.5 million below our full year 2025 results. This reduction is primarily due to a decrease in compensation expense including uh, incentive compensation.
Speaker #1: G&A will be 36 to 37 million, which is 5.5 million below our full year 2025 results. This reduction is primarily due to decrease in compensation expense, including incentive compensation.
Total interest expense, including 5.5 million of uh, deferred financing costs and capital and $2 million of capitalized interest will approximate 170 million and at the midpoint 30 million dollar increase compared to 2025, the increase is primarily due to, uh, the capitalized interest, which will increase 10 million primarily related to 3151 becoming operational on January 1st 2026.
3025, JFK the consolidation of that property will increase interest expense by roughly 8 million dollars, once refinanced.
Speaker #1: Total interest expense, including 5.5 million of deferred financing cost and 2 million dollars of capitalized interest, will approximate 170 million dollars and at the midpoint 30 million dollar increase compared to 2025.
Speaker #1: The increase is primarily due to the capitalized interest, which will increase 10 million dollars primarily related to 3151 becoming operational on January 1st, 2026.
3025, uh, bond issuances which happened in, uh, the June also a bond issuance in October and the related cmbs loan repayment will have an 8 million dollar increase in 2026, and the cpace loan, which we put on 3151 will increase interest expense by about 4 million dollars.
Speaker #1: 3025 JFK—the consolidation of that property will increase interest expense by roughly $8 million once refinanced. 3025 bond issuances, which happened in June, and also a bond issuance in October, and the related CMVS loan repayment will have an $8 million increase in 2026.
Thomas Wirth: 3025 JFK: The consolidation of that property will increase interest expense by roughly $8 million once refinanced. The 3025 bond issuances, which happened in June, also a bond issuance in October, and the related CMVS loan repayment will have an $8 million increase in 2026. And the CPACE loan, which we put on 3151, will increase interest expense by about $4 million. Termination and other income will be between $9 and 11 million compared to $6.6 million in 2025. The increase is primarily related to improved income from our increase in retail tenants that were put in place during 2025 and some in 2026. Net management and development fees are anticipated between $6 and 7 million, a $4 million decrease, mostly due to lower development fees in 2026 as our development joint ventures stabilize.
Thomas E. Wirth: 3025 JFK: The consolidation of that property will increase interest expense by roughly $8 million once refinanced. The 3025 bond issuances, which happened in June, also a bond issuance in October, and the related CMVS loan repayment will have an $8 million increase in 2026. And the CPACE loan, which we put on 3151, will increase interest expense by about $4 million. Termination and other income will be between $9 and 11 million compared to $6.6 million in 2025. The increase is primarily related to improved income from our increase in retail tenants that were put in place during 2025 and some in 2026. Net management and development fees are anticipated between $6 and 7 million, a $4 million decrease, mostly due to lower development fees in 2026 as our development joint ventures stabilize.
Termination and other income will be between 9 and 11 million compared to 6.6 and 255. The increase is primarily related to improved income from our increase in in retail tenants during, uh, that were put in place during 2025 and some in 26. Net management and development fees are anticipated between 6 and 7 million. A 4 million dollar decrease mostly due to lower development fees in 2026 as our development joint ventures, uh, stabilized.
Speaker #1: And the CPACE loan, which we put on 3151, will increase interest expense by about 4 million dollars. Termination and other income will be between 9 and 11 million, compared to 6.6 in '25.
Sales activity. We are anticipating 290 million of wholly owned sales, activity, which weights towards the first half of the year.
Speaker #1: The increase is primarily related to improved income from our increase in retail tenants during that were put in place during 2025 and some in '26.
Speaker #1: Net management and development fees are anticipated between 6 and 7 million. A 4 million dollar decrease mostly due to lower development fees in 2026 as our development joint ventures stabilize.
Speaker #1: Sales activity, we are anticipating 290 million dollars of wholly owned sales activity, which waits towards the first half of the year. As Gerry touched on, our sales activity will be used to reduce debt and continue our path back to investment grade.
Thomas Wirth: Sales activity: We are anticipating $290 million of wholly-owned sales activity, which weighs towards the first half of the year. As Jerry touched on, our sales activity will be used to reduce debt and continue our path back to investment grade. Depending on the volume and timing of these sales, we expect that we will use the shares to lower debt, which may include a buyback of outstanding bonds. Looking at financing activity: The 3025 JFK has a $178 million consolidated construction loan, which matures in July 2026. We plan to refinance that loan by late Q1 or early Q2. We're considering a low-rate secured loan on the residential portion of the property, totaling approximately $100 million, and using those proceeds, as well as the line of credit, to fully unencumber the office portion of the property.
Thomas E. Wirth: Sales activity: We are anticipating $290 million of wholly-owned sales activity, which weighs towards the first half of the year. As Jerry touched on, our sales activity will be used to reduce debt and continue our path back to investment grade. Depending on the volume and timing of these sales, we expect that we will use the shares to lower debt, which may include a buyback of outstanding bonds. Looking at financing activity: The 3025 JFK has a $178 million consolidated construction loan, which matures in July 2026. We plan to refinance that loan by late Q1 or early Q2. We're considering a low-rate secured loan on the residential portion of the property, totaling approximately $100 million, and using those proceeds, as well as the line of credit, to fully unencumber the office portion of the property.
Speaker #1: Depending on the volume and timing of these sales, you know, we expect that we will use the shares to lower debt, which may include a buyback of outstanding bonds.
On the residential portion of the property totaling approximately a hundred million dollars and using those proceeds, as well as the line of credit to fully unencumbered, the office portion of the property.
Speaker #1: Looking at financing activity, the 3025 JFK has a 178 million dollar consolidated construction loan, which matures in July 2026. We plan to refinance that loan by late first quarter or early second quarter.
Uh from the credit facility are unsecured line of credit matures in June 2026 and we anticipate an extension of that facility ahead of the maturity date.
Speaker #1: We're considering a low-rate secured loan on the residential portion of the property, totaling approximately 100 million dollars. And using those proceeds as well as the line of credit to fully unencumber the office portion of the property.
Uh, Rec capitalization of 18 of our joint, ventures at ATX as our joint ventures, continue to lease up and improve cash flow. We anticipate recapitalize in projects on a per Basu. Common Equity, uh, joint venture basis during the second half of 2026, with our ownership level, decreasing to our minority stake,
The recapitalization of both projects will generate cash. That will be used to further reduce our wholly owned, Leverage
Speaker #1: From the credit facility, our unsecured line of credit matures in June 2026, and we anticipate an extension of that facility ahead of the maturity date.
Thomas Wirth: From the credit facility: Our unsecured line of credit matures in June 2026, and we anticipate an extension of that facility ahead of the maturity date. Recapitalization of our joint ventures at ATX: As our joint ventures continue to lease up and improve cash flow, we anticipate recapitalizing projects on a pari passu, common equity, joint venture basis during the second half of 2026, with our ownership level decreasing to a minority stake. Recapitalization of both projects will generate cash that will be used to further reduce our wholly-owned leverage. Due to the timing and change in ownership structure being later in 2026, we have not included the benefit of any of these transactions in our FFO guidance. We anticipate no property acquisitions. Our share count will be roughly 180 million shares.
Thomas E. Wirth: From the credit facility: Our unsecured line of credit matures in June 2026, and we anticipate an extension of that facility ahead of the maturity date. Recapitalization of our joint ventures at ATX: As our joint ventures continue to lease up and improve cash flow, we anticipate recapitalizing projects on a pari passu, common equity, joint venture basis during the second half of 2026, with our ownership level decreasing to a minority stake. Recapitalization of both projects will generate cash that will be used to further reduce our wholly-owned leverage. Due to the timing and change in ownership structure being later in 2026, we have not included the benefit of any of these transactions in our FFO guidance. We anticipate no property acquisitions. Our share count will be roughly 180 million shares.
Due to the timing and changing and ownership structure being later in 2026. We've Not Included, the benefit of any of these transactions in our ffo guidance,
Speaker #1: Recapitalization of our joint ventures at ATX. As our joint ventures continue to lease up and improve cash flow, we anticipate recapitalizing projects on a pari-pursuit, common equity, joint venture basis.
Speaker #1: During the second half of 2026, with our ownership level decreasing to our minority stake, the recapitalization of both projects will generate cash that will be used to further reduce our wholly owned leverage.
We anticipate no property. Acquisitions our Share account will be roughly 180 million shares. Uh, while we feel incredibly, uh, positive about executing on our land sales program, this year, we have not included any land gains or losses in our results.
Focusing on the first quarter property level property. Level noi will approximately 70 million and will be fairly uh consistent with the fourth quarter.
Speaker #1: Due to the timing and changing in ownership structure being later in 2026, we have not included the benefit of any of these transactions in our FFO guidance.
Speaker #1: We anticipate no property acquisitions. Our share count will be roughly 180 million shares, while we feel incredibly positive about executing on our land sales program this year.
Thomas Wirth: While we feel incredibly positive about executing on our land sales program this year, we have not included any land gains or losses in our results. Focusing on Q1: Property-level NOI will approximately be $70 million and will be fairly consistent with Q4. While we will have the full quarter impact of $2 million incrementally at 3025 JFK, this will be partially offset by seasonality throughout the balance of the portfolio. FFO contribution from our joint ventures will total a positive $0.5 million for Q1. Our G&A expense for Q1 will total $12 million. That sequential increase is consistent with prior years and is primarily due to the timing of our deferred compensation expense recognition. Total interest expense will approximate $42 million, which includes about $1 million of capitalized interest.
Thomas E. Wirth: While we feel incredibly positive about executing on our land sales program this year, we have not included any land gains or losses in our results. Focusing on Q1: Property-level NOI will approximately be $70 million and will be fairly consistent with Q4. While we will have the full quarter impact of $2 million incrementally at 3025 JFK, this will be partially offset by seasonality throughout the balance of the portfolio. FFO contribution from our joint ventures will total a positive $0.5 million for Q1. Our G&A expense for Q1 will total $12 million. That sequential increase is consistent with prior years and is primarily due to the timing of our deferred compensation expense recognition. Total interest expense will approximate $42 million, which includes about $1 million of capitalized interest.
Speaker #1: We have not included any land gains or losses in our results. Focusing on the first quarter, property level NOI will approximately 70 million dollars and will be fairly consistent with the fourth quarter.
While we will have the full quarter, uh, impact of million dollars incrementally at 3025 JFK. This will be partially offset by seasonality throughout the balance of the portfolio. Ffo contribution from our joint ventures will total a positive 0.5 million for the first quarter. Our GNA expense for the first quarter will total 12 million. That's sequential increase is consistent with prior years and is primarily due to the timing of our deferred compensation expense recognition.
Speaker #1: While we will have the full quarter impact of $2 million incrementally at 3025 JFK, this will be partially offset by seasonality throughout the balance of the portfolio.
Total interest expense will approximate 42 million which includes about a million dollars of capitalized, interest termination, and other fees will total 2.5 million and that third party fees will approximate 1.5 million.
Speaker #1: FFO contribution from our joint ventures will total a positive 0.5 million for the first quarter. Our G&A expense for the first quarter will total 12 million dollars.
Speaker #1: That sequential increase is consistent with prior years and is primarily due to the timing of our deferred compensation expense recognition. Total interest expense will approximate $42 million, which includes about $1 million of capitalized interest.
Turning to our Capital plan. Uh, as outlined above our 2026, Capital plan has more activity than 2025 and will approximate 475 million. Our CAD payout ratio, will range between 70 and 90% And we expect incremental Improvement as the year progresses as uh, as the year continues.
Speaker #1: Termination and other fees will total 2.5 million. And net third-party fees will approximate 1.5 million. Turning to our capital plan, as outlined above, our 2026 capital plan has more activity than 2025 and will approximate 475 million dollars.
Thomas Wirth: Termination and other fees will total $2.5 million, and net third-party fees will approximate $1.5 million. Turning to our capital plan: As outlined above, our 2026 capital plan has more activity than 2025 and will approximate $475 million. Our CAD payout ratio will range between 70% and 90%, and we expect incremental improvement as the year progresses, as the year continues. Looking at our larger uses: We will refinance the 3025 JFK construction loan, which totals $178 million. We'll use $125 million for buyback activity on the bond side and debt reduction. Development and spend will total $50 million, including 3151 Market, 165 King of Prussia, and 325 JFK. We have $57 million of common dividends, $33 million of revenue maintaining capital, and $25 million of revenue creating capital. $10 million of equity contributions to fund tenant leases at One Uptown.
Thomas E. Wirth: Termination and other fees will total $2.5 million, and net third-party fees will approximate $1.5 million. Turning to our capital plan: As outlined above, our 2026 capital plan has more activity than 2025 and will approximate $475 million. Our CAD payout ratio will range between 70% and 90%, and we expect incremental improvement as the year progresses, as the year continues. Looking at our larger uses: We will refinance the 3025 JFK construction loan, which totals $178 million. We'll use $125 million for buyback activity on the bond side and debt reduction. Development and spend will total $50 million, including 3151 Market, 165 King of Prussia, and 325 JFK. We have $57 million of common dividends, $33 million of revenue maintaining capital, and $25 million of revenue creating capital. $10 million of equity contributions to fund tenant leases at One Uptown.
Looking at our larger uses, we will refinance the 3025 JFK construction loan which totals 178 million. We will use 125 million for uh, for buyback. Activity on the bond side and debt reduction development, and spend will total 50 million including 3151 Market.
Speaker #1: Our CAD payout ratio will range between 70 and 90 percent, and we expect incremental improvement as the year progresses. As the year continues. Looking at our larger uses, we will refinance the 3025 JFK construction loan, which totals 178 million.
165 King of Prussia and 325 JFK. We have 57 million in common, dividends 33 million of Revenue, maintaining capital and 25 million of Revenue, creating Capital, 10 million of equity contributions to fund tenant, leases at 1, Uptown the sources for these ongoing, uh,
Speaker #1: We'll use 125 million for buyback activity on the bond side. And debt reduction. Development and spend will total 50 million, including 3151 market, 165 King of Prussia, and 325 JFK.
uh, for these uses will be 110 million of cash flow after interest payments, speculative sales, activity, tolling, 290 million at the midpoint and 90 million of loan proceeds from, uh, potentially financing, the residential portion of 3025
Speaker #1: We have $57 million in common dividends, $33 million of revenue-maintaining capital, and $25 million of revenue-creating capital. There are also $10 million of equity contributions to fund tenant leases at One Uptown.
Based on the capital plan above, we anticipate having a proxy 52 million of cash on hands at the end of the year and full availability on the line of credit.
Speaker #1: The sources for these ongoing for these uses will be 110 million of cash flow after interest payments, speculative sales activity totaling 290 million at the midpoint, and 90 million of loan proceeds from potentially financing the residential portion of 3025.
Thomas Wirth: The sources for these ongoing uses will be $110 million of cash flow after interest payments, speculative sales activity totaling $290 million at the midpoint, and $90 million of loan proceeds from potentially financing the residential portion of 3025. Based on the capital plan above, we anticipate having approximately $52 million of cash on hand at the end of the year and full availability on the line of credit. We anticipate net debt to EBITDA to range between 84 and 88, and our fixed charge ratio between 18 and 20. Implicit in these ratios is the extension of our asset sales program and the recapitalization of the ATX developments. These ratios do continue to be elevated as increased revenue comes online with the development projects, particularly 3151, which is now a wholly-owned investment, which continues to generate operating losses.
Thomas E. Wirth: The sources for these ongoing uses will be $110 million of cash flow after interest payments, speculative sales activity totaling $290 million at the midpoint, and $90 million of loan proceeds from potentially financing the residential portion of 3025. Based on the capital plan above, we anticipate having approximately $52 million of cash on hand at the end of the year and full availability on the line of credit. We anticipate net debt to EBITDA to range between 84 and 88, and our fixed charge ratio between 18 and 20. Implicit in these ratios is the extension of our asset sales program and the recapitalization of the ATX developments. These ratios do continue to be elevated as increased revenue comes online with the development projects, particularly 3151, which is now a wholly-owned investment, which continues to generate operating losses.
Speaker #1: Based on the capital plan above, we anticipate having approximately 52 million of cash on hand at the end of the year and full availability on the line of credit.
Speaker #1: We anticipate net debt to EBITDA to range between 84 and 88, and our fixed charge ratio between 18 and 20. Implicit in these ratios is the extension of our asset sales program and the recapitalization of the ATX developments.
We anticipate net debt to ibida arranged between 84 and 88 and our fixed charge ratio between 1/8 and 2, 0 Imp in these ratios is the extension of our asset sales program and the recapitalization of the ATX developments. These re these ratios do continue to be uh, elevated as increased Revenue comes online with the development projects, particularly 3151, which is now wholly owned, invest wholly, owned investment, which continues to generate operating losses as these developments stabilize. Our leverage will decrease, will further accelerate, uh, Improvement on these metrics and we anticipate the leverage levels will improve as the year progresses.
I will not turn the call back over to Jerry.
Speaker #1: These ratios do continue to be elevated as increased revenue comes online with the development projects, particularly 3151, which is now a wholly owned investment, a wholly owned investment, which continues to generate operating losses.
Speaker #1: As these developments stabilize, our leverage will decrease. We'll further accelerate improvement on these metrics, and we anticipate the leverage levels will improve as the year progresses.
Thomas Wirth: As these developments stabilize, our leverage will decrease, will further accelerate improvement on these metrics, and we anticipate the leverage levels will improve as the year progresses. I will now turn the call back over to Jerry.
Thomas E. Wirth: As these developments stabilize, our leverage will decrease, will further accelerate improvement on these metrics, and we anticipate the leverage levels will improve as the year progresses. I will now turn the call back over to Jerry.
Speaker #1: I will not turn the call
Speaker #1: back over to Gerry. Great,
Gerard H. Sweeney: Great, Tom. Thank you very much. So, as we look ahead, the operating platform enables us to capitalize on improving real estate market conditions. Earnings growth from our development pipeline has begun to translate into earnings growth in 2026, and we expect further improvement in 2027. We have a very achievable sales program laid out that will drive a number of factors in the organization. So, the groundwork has really been laid, and we'll continue to build on the momentum from an operating, from a capital standpoint, to drive long-term value. With that, Jonathan, we are delighted to open up the floor for questions. We do ask, as we always, in the interest of time, you limit yourself to one question and a follow-up. Jonathan?
Gerard H. Sweeney: Great, Tom. Thank you very much. So, as we look ahead, the operating platform enables us to capitalize on improving real estate market conditions. Earnings growth from our development pipeline has begun to translate into earnings growth in 2026, and we expect further improvement in 2027. We have a very achievable sales program laid out that will drive a number of factors in the organization. So, the groundwork has really been laid, and we'll continue to build on the momentum from an operating, from a capital standpoint, to drive long-term value. With that, Jonathan, we are delighted to open up the floor for questions. We do ask, as we always, in the interest of time, you limit yourself to one question and a follow-up. Jonathan?
Speaker #2: Tom. Thank you very much. So as you look ahead, the operating platform enables us to capitalize on improving real estate market conditions. Earnings growth from our development pipeline has begun to translate into earnings growth in '26, and we expect further improvement in '27.
Sales program laid out that will drive a number of factors in the organization. Uh, so the groundwork has really been laid and we'll, we'll continue to build on the momentum from an operating from a capital standpoint to drive long-term value. Uh, with that. Jonathan we we are delighted to open up before for questions. We do ask as we always uh, in the interest of time to limit yourself to 1 question and a follow-up
Jonathan certainly. And our first question for today comes from the line of Seth Bergie from City, your question, please?
Speaker #2: We have a very achievable sales program laid out that will drive a number of factors in the organization. So the groundwork has really been laid, and we'll continue to build on the momentum from an operating, from a capital standpoint, to drive long-term value.
Give me a question. Um, I think you mentioned in your opening remarks that um, you know, just where your current um
Speaker #2: to open up the floor for questions. We With that, Jonathan, we are delighted do ask, as we always in the interest of time, to limit yourself to one question and a follow-up.
Speaker #2: Jonathan?
Speaker #3: Certainly. And our first question for
Operator: Certainly. And our first question for today comes from the line of Seth Bergey from CITI. Your question, please.
Operator: Certainly. And our first question for today comes from the line of Seth Bergey from CITI. Your question, please.
Speaker #3: today comes from the line of Seth Berge from Citi. Your question, please.
You know, your average cost of bond. That is kind of north of, uh, 6% and 50% is kind of north of 8% and for you to refinance those kind of today. You could save 10 cents on interest expense I guess. Kind of um you know what is a hurdle of where you would kind of want to look um to pull forward some of those refinancing
[Analyst] (CITI): Seth, can I ask you my question? I think you mentioned in your opening remarks that just where your current average cost of bond debt is kind of north of 6% and 50% is kind of north of 8%. Were you to refinance those kind of today, you could save $0.10 on interest expense. I guess kind of what is a hurdle of where you would kind of want to look to pull forward some of those refinancing?
Gerard H. Sweeney: Seth.
Speaker #2: Seth, my
Seth Bergey: Can I ask you my question? I think you mentioned in your opening remarks that just where your current average cost of bond debt is kind of north of 6% and 50% is kind of north of 8%. Were you to refinance those kind of today, you could save $0.10 on interest expense. I guess kind of what is a hurdle of where you would kind of want to look to pull forward some of those refinancing?
Speaker #2: Question: I think you mentioned in your opening
Speaker #3: remarks that just where your current your average cost of bond debt is kind of north of 6 percent and 50 percent is kind of north of 8 percent.
Well I think the first good morning I think the first cause of action we have right now is to exit on the sails program and generate additional liquidity and continue to improve the credit metrics which we think will continue to reduce our overall cost of debt capital. And I don't we don't really have in our business plan for 26. Any kind of pull forwarding of those bonds.
Speaker #3: And were you to refinance those kind of today, you could save 10 cents on interest expense. I guess kind of what is a hurdle of where you would kind of want to look to pull forward some of those refinancing?
Speaker #3: And were you to refinance those kind of today, you could save 10 cents on interest expense. I guess kind of what is a hurdle of where you would kind of want to look to pull forward some of those
Speaker #2: Well, I think the first—good morning. I think the first course of action we have right now is to exit on the sales program and generate additional liquidity, and continue to improve the credit metrics, which we think will continue to reduce our overall cost of debt capital.
Gerard H. Sweeney: Well, good morning. I think the first course of action we have right now is to execute on the sales program and generate additional liquidity and continue to improve the credit metrics, which we think will continue to reduce our overall cost of debt capital. We don't really have in our business plan for 2026 any kind of pull-forward of those bonds at this point. But look, capital market conditions are ever-evolving. We think that execution of the sales program, continued improvement on the lease-up of the development projects will generate some additional NOI and liquidity, and we'll be evaluating the bond buyback program, the debt reduction program, all as part of the sales program acceleration.
Gerard H. Sweeney: Well, good morning. I think the first course of action we have right now is to execute on the sales program and generate additional liquidity and continue to improve the credit metrics, which we think will continue to reduce our overall cost of debt capital. We don't really have in our business plan for 2026 any kind of pull-forward of those bonds at this point. But look, capital market conditions are ever-evolving. We think that execution of the sales program, continued improvement on the lease-up of the development projects will generate some additional NOI and liquidity, and we'll be evaluating the bond buyback program, the debt reduction program, all as part of the sales program acceleration.
At this point. But look, Capital market conditions are ever evolving. Uh, we think that excuse of the sale program continued Improvement on the lease up of the development projects will generate some additional noi and liquidity and will be evaluating uh you know the uh the bond uh buyback program, the debt reduction program, all as part of uh the sails program acceleration.
Speaker #2: And I don't we don't really have in our business plan for '26 any kind of pull forwarding of those bonds at this point. But look, capital market conditions are ever-evolving.
Great. Thanks. And then just as a follow-up, um, you know, with the kind of 125 million year mark for debt or Sherry purchase kind of, how are you thinking about how much of that you would want to do is, uh, share BuyBacks versus, uh, debt repurchase?
Speaker #2: We think that execution of the sale program, continued improvement on the lease-up of the development projects, will generate some additional NOI and liquidity, and we will be evaluating the bond buyback program and the debt reduction program, all as part of the sales program acceleration.
Yeah, look, I I we didn't mention anything about 125 billion dollar share buyback. I think our major focus is, uh, sales proceeds will be used, first to reduce leverage, uh, period. That's top priority. Uh,
Speaker #3: Great. Thanks. And then just as a follow-up, with the kind of 125 million earmarked for debt or share repurchase, kind of how are you thinking about how much of that you would want to do as a share buybacks versus a
[Analyst] (CITI): Great. Thanks. And then just as a follow-up, with the kind of $125 million earmarked for debt or share repurchase, kind of how are you thinking about how much of that you would want to do as share buybacks versus debt repurchase?
Seth Bergey: Great. Thanks. And then just as a follow-up, with the kind of $125 million earmarked for debt or share repurchase, kind of how are you thinking about how much of that you would want to do as share buybacks versus debt repurchase?
Speaker #3: debt repurchase? Yeah.
Gerard H. Sweeney: Yeah. Look, we didn't mention anything about $125 million share buyback. I think our major focus is sales proceeds will be used first to reduce leverage, period. That's top priority. As we accelerate that program and get more clarity on maybe even some additional sales, we think we have an opportunity to be opportunistic in buying back what we think are significantly undervalued shares. But I want to be very clear. Our primary objective of the asset sale program is to continue on that path back to investment-grade metrics. As Tom touched on, we temporarily increased some of those leverage metrics by doing the buyouts of our Schuylkill Yards joint ventures. Clearly, with the major tenant and the income stream coming off 3025, that brings some of those down fairly dramatically immediately.
Gerard H. Sweeney: Yeah. Look, we didn't mention anything about $125 million share buyback. I think our major focus is sales proceeds will be used first to reduce leverage, period. That's top priority. As we accelerate that program and get more clarity on maybe even some additional sales, we think we have an opportunity to be opportunistic in buying back what we think are significantly undervalued shares. But I want to be very clear. Our primary objective of the asset sale program is to continue on that path back to investment-grade metrics. As Tom touched on, we temporarily increased some of those leverage metrics by doing the buyouts of our Schuylkill Yards joint ventures. Clearly, with the major tenant and the income stream coming off 3025, that brings some of those down fairly dramatically immediately.
Speaker #2: Look, we didn't mention anything about 125 million dollar share buyback. I think our major focus is sales proceeds will be used first to reduce leverage.
As we accelerate that program and get more clarity on, maybe even some additional sales. Uh we think we have it. We have an opportunity to be opportunistic in buying backwards think are significantly, undervalued shares but want to be very clear. Our our primary objective of the asset sale program is to uh continue on that path. Back to investment grade metrics uh as Tom touched on uh you know we we temporarily increase some of those leverage metrics by doing the buying
Speaker #2: Period. That's top priority. As we accelerate that program and get more clarity on maybe even some additional sales, we think we have an opportunity opportunistic in buying back what we think are significantly undervalued shares.
Speaker #2: But one of the very clear our primary objective of the asset sale program is to continue on that path back to investment-grade metrics. As Tom touched on, we temporarily increased some of those leverage metrics by doing the buyouts of our Schuylkill Yards joint ventures.
Lots of uh, of our scooper yards joint ventures, uh, clearly with the major tenant and the income stream coming off 3025. That brings some of those down fairly dramatically immediately, but we do want to stay on a very crisp path to continue to improve overall, balance sheet metrics, and stock buyback, optionality comes into play as we achieve our other objectives. So hopefully, that is clear.
Great. Thank you.
Thank you. And our next question comes from the line of Anthony Pauline from JP Morgan your question, please.
Speaker #2: Clearly, with the major tenant and the income stream coming off 3025, that brings some of those down fairly dramatically immediately. But we do want to stay on a very crisp path to continue to improve overall balance sheet metrics.
Gerard H. Sweeney: We do want to stay on a very crisp path to continue to improve overall balance sheet metrics. Stock buyback optionality comes into play as we achieve our other objectives. Hopefully, that is clear.
Gerard H. Sweeney: We do want to stay on a very crisp path to continue to improve overall balance sheet metrics. Stock buyback optionality comes into play as we achieve our other objectives. Hopefully, that is clear.
Speaker #2: And stock buyback optionality comes into play as we achieve our other objectives. So hopefully that is clear.
Uh, thanks. Good morning everybody. Um, Jerry just following up on the dispositions and and thinking about, uh, uh, Capital markets activity, you know, and we look at your stock price and and where it is and you just mentioned, you think it's pretty undervalued like as you think about what to sell, is there a part of the portfolio that you think is just being uh,
Speaker #3: Great. Thank you.
[Analyst] (CITI): Great. Thank you.
Seth Bergey: Great. Thank you.
Speaker #1: Thank you. And our next question comes from the line of Anthony Pauline from JP Morgan. Your question, please.
Operator: Thank you. Our next question comes from the line of Anthony Paolini from JPMorgan. Your question, please.
Operator: Thank you. Our next question comes from the line of Anthony Paolini from JPMorgan. Your question, please.
Speaker #4: Thanks. Good morning, everybody. Gerry, just following up on the dispositions and thinking about capital markets activity, when we look at your stock price and where it is—and you just mentioned you think it's pretty undervalued—as you think about what to sell, is there a part of the portfolio that you think is just being undervalued, or just not being appreciated in the market?
[Analyst] (JPMorgan Chase): Thanks. Good morning, everybody. Jerry, just following up on the dispositions and thinking about capital markets activity. When we look at your stock price and where it is, and you just mentioned you think it's pretty undervalued, as you think about what to sell, is there a part of the portfolio that you think is just being undervalued or just not being appreciated in the market? And are you trying to crystallize value with that, or are you going into the market just selling what can't be sold right now? I understand debt paydown is the priority, but just trying to understand where you're trying to go with the portfolio and what to sell.
Anthony J. Paolini: Thanks. Good morning, everybody. Jerry, just following up on the dispositions and thinking about capital markets activity. When we look at your stock price and where it is, and you just mentioned you think it's pretty undervalued, as you think about what to sell, is there a part of the portfolio that you think is just being undervalued or just not being appreciated in the market? And are you trying to crystallize value with that, or are you going into the market just selling what can't be sold right now? I understand debt paydown is the priority, but just trying to understand where you're trying to go with the portfolio and what to sell.
You know, undervalued or or just not being appreciated in the market, and are you trying to crystallize value with that? Or are you going into the market? Just selling what? What can't be sold right now? Uh, I understand Debt Pay down is the priority but just trying to understand where you're trying to go with the portfolio and what to sell.
Speaker #4: And are you trying to crystallize value with that, or are you going into the market just selling what can't be sold right now? I understand debt paydown is the priority, but just trying to understand where you're trying to go with the portfolio and what to sell.
Speaker #2: Yeah, good morning, Tony. Great question. Yeah. Look, we think the entire portfolio is being undervalued. So I think, across the board universally, from a public market standpoint, we think that we're significantly undervalued, primarily due, I think, to the perceived headwinds on stabilizing the remaining two development projects.
Gerard H. Sweeney: Yeah. Good morning, Tony. Great question. Yeah. Look, we think the entire portfolio is being undervalued. So I think across the board, universally, from a public market standpoint, we think that we're significantly undervalued. Primarily, do I think the perceived headwinds on stabilizing the remaining 2 development projects. But as we're looking at the sale program going forward, we took a hard look at what we forecast some of the growth rates to be on some of our assets, given changing submarket dynamics. We took a look at what we thought the net present value to us was on holding certain assets, and then kind of developed a framework for what assets do we think could, number one, be marketable in today's climate. Again, we're targeting an average cap rate around 8%.
Gerard H. Sweeney: Yeah. Good morning, Tony. Great question. Yeah. Look, we think the entire portfolio is being undervalued. So I think across the board, universally, from a public market standpoint, we think that we're significantly undervalued. Primarily, do I think the perceived headwinds on stabilizing the remaining 2 development projects. But as we're looking at the sale program going forward, we took a hard look at what we forecast some of the growth rates to be on some of our assets, given changing submarket dynamics. We took a look at what we thought the net present value to us was on holding certain assets, and then kind of developed a framework for what assets do we think could, number one, be marketable in today's climate. Again, we're targeting an average cap rate around 8%.
Speaker #2: But as we're looking at the sale program going forward, we took a hard look at the what we forecast some of the growth rates to be on some of our assets, given changing submarket dynamics.
Speaker #2: We took a look at what we thought the net present value to us was on holding certain assets, and then kind of developed a framework for what assets do we think could, number one, be marketable in today's climate. Again, we're targeting average cap right around 8 percent, where we have lease-up risk in some assets that we think will be protracted.
Gerard H. Sweeney: Where we have lease-up risk in some assets that we think will be protracted and will be expensive, so we can obviate some future capital spend. Then just the general portfolio realignment. As we talked before, our major focus in the Pennsylvania suburbs to get down to one or two core submarkets. Our focus in Austin is to really shift our attention primarily to the tremendous opportunity we have at Uptown ATX. And then, as we've mentioned publicly, one of our programs is to rationally exit the DC marketplace. So when we looked at the overall sale program, Tony, it was a company-wide look and kind of looking through a number of quantifiable metrics, identify which properties we thought would generate real value for us today without sacrificing growth rates going forward.
Gerard H. Sweeney: Where we have lease-up risk in some assets that we think will be protracted and will be expensive, so we can obviate some future capital spend. Then just the general portfolio realignment. As we talked before, our major focus in the Pennsylvania suburbs to get down to one or two core submarkets. Our focus in Austin is to really shift our attention primarily to the tremendous opportunity we have at Uptown ATX. And then, as we've mentioned publicly, one of our programs is to rationally exit the DC marketplace. So when we looked at the overall sale program, Tony, it was a company-wide look and kind of looking through a number of quantifiable metrics, identify which properties we thought would generate real value for us today without sacrificing growth rates going forward.
The Net Present Value to us was on holding certain assets and then kind of developed a framework for what assets do we think could number 1 be marketable in today's climate, uh, at again, we're targeting average cap right around 8%, uh, where we have lease up risk in some apps that we think, will be protracted, uh, and will be expensive. So we can obviate some future Capital spend. And then just the general portfolio. Realignment as we talked before, you know, our major Focus, uh, in in uh, in uh, the Pennsylvania suburbs. We get down to 1 or 2 core submarkets. Uh, our focus in Austin is to really shift our attention primarily to the tremendous opportunity. We have at 1 at the at Uptown ATX. And then as we've mentioned, publicly 1 of our programs is to, you know, rationally exit the DC Marketplace. So, when we looked at the at the overall
Speaker #2: And we'll be expensive, so we can obviate some future capital spend. And then, just the general portfolio realignment—as we talked before, our major focus in the Pennsylvania suburbs is to get down to one or two core submarkets.
Sales program. Tony it was a, it was a companywide look and kind of looking through a number of quantifiable metrics identify, which properties, we thought would generate the real value for us today without sacrificing. Uh uh uh growth rates going forward.
Speaker #2: Our focus in Austin is to really shift our attention primarily to the tremendous opportunity we have at Uptown ATX. And then, as we mentioned publicly, one of our programs is to rationally exit the DC marketplace.
Speaker #2: So when we looked at the overall sale program, Tony, it was a company-wide look and kind of looking through a number of quantifiable metrics identify which properties we thought would generate real value for us today.
Speaker #2: Without sacrificing growth rates going forward.
Okay, got it. Thanks and then just my follow-up is on the life science side. You all have the the incubator space. And I think part of that uh that effort was to kind of see what was coming down the pike as tenants grow I guess, is there anything to glean from what you're seeing and that part of the portfolio is to, you know, whether there's been any um, Improvement in terms of life science, funding for these smaller companies or the startups that over time can become, you know, bigger tenants on the portfolio or just anything, excuse me? Anything you're seeing there that might be helpful as a forward. Look,
[Analyst] (JPMorgan Chase): Okay. Got it. Thanks. And then just my follow-up is, on the life science side, you all have the incubator space. And I think part of that effort was to kind of see what was coming down the pike as tenants grow. I guess, is there anything to glean from what you're seeing in that part of the portfolio as to whether there's been any improvement in terms of life science funding for these smaller companies or the startups that, over time, could become bigger tenants in the portfolio? Or just anything, excuse me, anything you're seeing there that might be helpful as a forward look.
Anthony J. Paolini: Okay. Got it. Thanks. And then just my follow-up is, on the life science side, you all have the incubator space. And I think part of that effort was to kind of see what was coming down the pike as tenants grow. I guess, is there anything to glean from what you're seeing in that part of the portfolio as to whether there's been any improvement in terms of life science funding for these smaller companies or the startups that, over time, could become bigger tenants in the portfolio? Or just anything, excuse me, anything you're seeing there that might be helpful as a forward look.
Speaker #4: Thanks. And then just my follow-up is: okay, got it. On the life science side, you all have the incubator space, and I think part of that effort was to kind of see what was coming down the pike as tenants grow.
Speaker #4: I guess, is there anything to glean from what you're seeing in that part of the portfolio as to whether there's been any improvement in terms of life science funding for these smaller companies or the startups that over time could become bigger tenants in the portfolio or just anything?
Speaker #4: Excuse me, anything you're seeing there that might be helpful as a forward
Speaker #4: look? Yeah.
Gerard H. Sweeney: Yeah. And George and I can tag to this. I mean, on the life science front, we're seeing a number of green shoots. But honestly, I think the entire life science market needs to see those green shoots grow into trees. So we are seeing activity. There's been a good performance of a number of the privately held life science companies in the Philadelphia regions, particularly selling gene therapy. We're seeing a high velocity of activity at our incubator space and the graduate labs, and have signed up a couple of key tenants there with a good, healthy pipeline. But George, maybe you could add some color to that as well.
Gerard H. Sweeney: Yeah. And George and I can tag to this. I mean, on the life science front, we're seeing a number of green shoots. But honestly, I think the entire life science market needs to see those green shoots grow into trees. So we are seeing activity. There's been a good performance of a number of the privately held life science companies in the Philadelphia regions, particularly selling gene therapy. We're seeing a high velocity of activity at our incubator space and the graduate labs, and have signed up a couple of key tenants there with a good, healthy pipeline. But George, maybe you could add some color to that as well.
Speaker #2: And George and I can tag team this. I mean, on the life science front, we're seeing a number of green shoots but honestly, I think the entire life science market needs to see those green shoots grow into trees.
Yeah. And and and George and I can tag team this, I mean, you know, on the life science front, we're seeing it. We're seeing a number of green shoots but honestly I think the entire life science Market needs to see those green shoots grow into trees. So um, you know, we are seeing activity. Uh, uh, there's been a, a good performance of a number of the privately held life science. Companies in the Philadelphia region, particularly selling gene therapy. Uh, we're seeing a high velocity of activity that are incubator space and The Graduate labs and is signed up a couple key tenants there with a good healthy pipeline, uh, but George maybe you could add some color to that as well. Yeah, I think, as Jerry mentioned, I mean, you know, the, the incubator, you know, the 1, 210 bench, uh, kind of companies, we have seen them expand. And, and that quite honestly is what helped, uh,
Speaker #2: So we are seeing activity. There's been a good performance of a number of the privately held life science companies in the Philadelphia region, particularly Celengene Therapy. We're seeing a high velocity of activity at our incubator space and the graduate labs.
You know, generate The Graduate lab spaces, uh, which are 93% occupied at this point. So we've got, you know, all of that. We have 1 4,000 square foot lab, uh, left to lease up on the uh,
Speaker #2: And it's signed up a couple of key tenants there with a good healthy pipeline. But George, maybe you could add some color to that as well.
Speaker #4: Yeah. I think as Gerry mentioned, I mean, the incubator, the one, two, ten bench kind of companies we have seen them expand in that quite honestly is what helped generate the graduate lab spaces which are 93 percent occupied at this point.
[Analyst] (JPMorgan Chase): Yeah. I think, as Jerry mentioned, I mean, the incubator, the 1-, 2-, 10-bench kind of companies, we have seen them expand. And that, quite honestly, is what helped generate the graduate lab spaces, which are 93% occupied at this point. So we've got all of that. We have 14,000sq ft lab left to lease up on the eighth floor. But again, I think we've seen a little bit of expansion outside of the incubator. And we're really just kind of waiting for the next kind of expansion of graduate lab tenants to then move into full-fledged lab space. Okay. Thank you.
George Johnstone: Yeah. I think, as Jerry mentioned, I mean, the incubator, the 1-, 2-, 10-bench kind of companies, we have seen them expand. And that, quite honestly, is what helped generate the graduate lab spaces, which are 93% occupied at this point. So we've got all of that. We have 14,000sq ft lab left to lease up on the eighth floor. But again, I think we've seen a little bit of expansion outside of the incubator. And we're really just kind of waiting for the next kind of expansion of graduate lab tenants to then move into full-fledged lab space.
The eighth floor. Um, but again I think it's we've seen, you know, a little bit of expansion uh, outside of the incubator. Uh, and we're really just kind of waiting for the next, you know, kind of expansion of graduate lab tenants to then move into full-fledged lab space.
Okay, thank you.
Thank you. And our next question comes from the line of Steve essay from evercore isi. Your question, please?
Speaker #4: So, we've got all of that. We have one 4,000-square-foot lab left to lease up on the eighth floor, but again, I think we've seen a little bit of expansion outside of the incubator, and we're really just kind of waiting for the next kind of expansion of graduate lab tenants to then move into full-fledged lab space.
Anthony J. Paolini: Okay. Thank you.
Speaker #3: Thank you.
Speaker #1: Thank you. And our next question comes from the line of Steve Sakla from Evercore ISI. Your question, please.
Operator: Thank you. And our next question comes from the line of Steve Sakwa from Evercore ISI. Your question, please.
Operator: Thank you. And our next question comes from the line of Steve Sakwa from Evercore ISI. Your question, please.
Speaker #5: Yeah. Thanks. Good morning. I guess, Gerry, as it relates to the outright sales as well as the recaps of the JVs, maybe my recollection was wrong here, but I thought there was maybe a view that you would try and do some of those JV recaps and bring those assets to market kind of earlier in '26 or at least one of them.
Steve Sakwa: Yeah. Thanks. Good morning. I guess, Jerry, as it relates to the outright sales as well as the recaps of the JVs, maybe my recollection was wrong here, but I thought there was maybe a view that you would try and do some of those JV recaps and bring those assets to market kind of earlier in 2026, or at least one of them. But now it sounds like those are kind of pushed to the back half of the year. Just trying to sort of understand a little bit the thinking of maybe flip-flopping those. And is it just a question of getting things like Solaris more stabilized before you can bring kind of an apartment asset to market today to maximize value on that sort of transaction?
Steve Sakwa: Yeah. Thanks. Good morning. I guess, Jerry, as it relates to the outright sales as well as the recaps of the JVs, maybe my recollection was wrong here, but I thought there was maybe a view that you would try and do some of those JV recaps and bring those assets to market kind of earlier in 2026, or at least one of them. But now it sounds like those are kind of pushed to the back half of the year. Just trying to sort of understand a little bit the thinking of maybe flip-flopping those. And is it just a question of getting things like Solaris more stabilized before you can bring kind of an apartment asset to market today to maximize value on that sort of transaction?
Yeah. Thanks. Good morning, I guess Cherry as it relates to the outright sales as well as the Recaps of the JVS. You know, maybe my recollection was, was wrong here. But I thought there was a, um, you know, maybe a view that you would try and and do some of those JV Recaps, and bring those assets to Market, kind of earlier in 26, or at least 1 of them. Uh, but now sounds like those are kind of pushed to the back half of the year. Just trying to sort of understand a little bit, the thinking of maybe flip-flopping those. And, and is it just a question of getting things like Solaris more stabilized before? You can bring kind of a an apartment asset to market today to to maximize value on that, uh, you know, sort of transaction.
Speaker #5: But now it sounds like those are kind of pushed to the back half of the year. Just trying to sort of understand a little bit the thinking of maybe flip-flopping those and is it just a question of getting things like Solaris more stabilized before you can bring kind of an apartment asset to market today to maximize value on that sort of transaction?
Yeah, it's uh good morning. Steve look, I think our business plan. Contemplated those Recaps occur in the second half of the year. Uh the business plan. Also, as Tom mentioned doesn't really include any earnings impact of those plans in our for the year. Uh,
That being said we're actively in the market uh continually evaluating with a variety of of investors. Uh, what the right timing is to recap, their Solaris has done very well. It's as I mentioned, you know, it's a it's essentially, 99% least
Speaker #2: Yeah. Good morning, Steve. Look, I think our business plan contemplated those recaps occurring in the second half of the year. The business plan also, as Tom mentioned, doesn't really include any earnings impact of those plans for the year.
Gerard H. Sweeney: Yeah. Good morning, Steve. Look, I think our business plan contemplated those recaps occur in the second half of the year. The business plan also, as Tom mentioned, doesn't really include any earnings impact of those plans for the year. That being said, we're actively in the markets, continually evaluating with a variety of investors what the right timing is to recap there. Solaris has done very well. As I mentioned, it's essentially 99% leased. I think to accelerate the leasing of that property, you may recall from our previous calls, we did embark on a fairly strong concession package, given the oversupply in that market. We were successful, at one point, absorbing almost 40 units a month. Right now, we're heavy into the early stage of renewals.
Gerard H. Sweeney: Yeah. Good morning, Steve. Look, I think our business plan contemplated those recaps occur in the second half of the year. The business plan also, as Tom mentioned, doesn't really include any earnings impact of those plans for the year. That being said, we're actively in the markets, continually evaluating with a variety of investors what the right timing is to recap there. Solaris has done very well. As I mentioned, it's essentially 99% leased. I think to accelerate the leasing of that property, you may recall from our previous calls, we did embark on a fairly strong concession package, given the oversupply in that market. We were successful, at one point, absorbing almost 40 units a month. Right now, we're heavy into the early stage of renewals.
Speaker #2: That being said, we're actively in the market, continually evaluating with a variety of investors what the right timing is to recap there. Solaris has done very well.
Speaker #2: As I mentioned, it's essentially 99 percent leased. I think to accelerate the leasing of that property, you may recall from our previous calls, we did embark on a fairly strong concession package given the oversupply in that market.
Speaker #2: We were successful. At one point, absorbing almost 40 units a month. Right now, we're heavy into the early stage of renewals. So all the renewals that we have done in the third quarter I'm sorry, beginning of the third quarter and fourth quarter of last year enrolling thus far this year, we're getting almost a 13 percent increase in effective rents.
Gerard H. Sweeney: So all the renewals that we have done in Q3, I'm sorry, beginning in Q3 and Q4 of last year and rolling thus far this year, we're getting almost a 13% increase in effective rent. So that's a huge impact on the NOI. So we're monitoring that to decide the best time to recap that. So that's moving along on a very nice track. And we feel very confident that that will be happening, call it a midyear convention. It could occur sooner than that. On One Uptown, right now, with what's closing in on 63% leasing, the pipeline remains pretty strong, particularly on the small tenant side. That's why we're building out one of the floors as another spec suite floor. We're certainly anticipating making more leasing progress there.
Gerard H. Sweeney: So all the renewals that we have done in Q3, I'm sorry, beginning in Q3 and Q4 of last year and rolling thus far this year, we're getting almost a 13% increase in effective rent. So that's a huge impact on the NOI. So we're monitoring that to decide the best time to recap that. So that's moving along on a very nice track. And we feel very confident that that will be happening, call it a midyear convention. It could occur sooner than that. On One Uptown, right now, with what's closing in on 63% leasing, the pipeline remains pretty strong, particularly on the small tenant side. That's why we're building out one of the floors as another spec suite floor. We're certainly anticipating making more leasing progress there.
Embark on a fairly strong, concession package given the oversupply in that market. Uh, we were successful at 1 Point absorbing almost 40 units a month. Uh, right now, we're heavy into the early stage of renewals, so all the renewals that we have done in the third quarter, I'm sorry at the beginning of the third quarter and fourth quarter of last year enrolling, thus far this year, you know, we're getting almost a 13% increase in effective, right? So that's a huge impact on the noi. So we're monitoring that to decide the best time to recap that. So that's, that's moving along in a very nice track. And we feel very confident that that will be happening. Uh, uh, uh, it it it called a mid-year convention, uh, it could occur sooner than that, uh, on 1 Uptown, you know, right now with was closing in on 63%, leasing the pipeline remains, pretty strong, particularly on the small tenants size, that's why we're building out 1 of the floors, as, as another spec Suite floor, you know?
Speaker #2: That's a huge impact on the NOI. So we're monitoring that to decide the best time to recap that. So that's moving along on a very nice track, and we feel very confident that that will be happening, call it a mid-year convention.
Speaker #2: It could occur sooner than that. On one Uptown, right now with what's closing in on 63 percent leasing, the pipeline remains pretty strong. Particularly on the small tenant side, that's why we're building out one of the floors as another spec suite floor.
We're certainly anticipating making more leasing progress there. And again, we're dovetailing those leasing efforts Steve with our conversation with recap Partners as well. So it's not like, it's not a sequential, it's kind of a concurrent review that we're going through. Uh, so I hope that answers the question, but we would love to get those done sooner rather than later, but I think in the interest of being conservative, we didn't really factor in any of that impact into our earnings outlook for the year.
Speaker #2: We're certainly anticipating making more leasing progress there. And again, we're dovetailing those leasing efforts, Steve, with our conversations with recap partners as well. So it's not like it's not a sequential, it's kind of a concurrent review that we're going through.
Gerard H. Sweeney: And again, we're dovetailing those leasing efforts, Steve, with our conversations with recap partners as well. So it's not a sequential. It's kind of a concurrent review that we're going through. So I hope that answers the question. But we would love to get those done sooner rather than later. But I think, in the interest of being conservative, we didn't really factor in any of that impact into our earnings outlook for the year.
Gerard H. Sweeney: And again, we're dovetailing those leasing efforts, Steve, with our conversations with recap partners as well. So it's not a sequential. It's kind of a concurrent review that we're going through. So I hope that answers the question. But we would love to get those done sooner rather than later. But I think, in the interest of being conservative, we didn't really factor in any of that impact into our earnings outlook for the year.
Speaker #2: So I hope that answers the question, but we would love to get those done sooner rather than later. But I think in the interest of being conservative, we didn't really factor in any of that impact into our earnings outlook for the year.
Okay, great and maybe just to go back. I again I'm I'm just trying to make sure I had the facts, right? I I think you said there was like a million square feet of of uh, of pipeline or maybe it was a million and a half. Maybe could you just maybe provide a little more color on, you know, the overall pipeline in, you know, just kind of broadly by market and uh you know, where are you seeing kind of the most demand and and you know, how they're by product type or you know whether its life science office uh in which sub markets?
Speaker #5: Okay. Great. And maybe just to go back, again, I'm just trying to make sure I had the facts right. I think you said there was like a million square feet of pipeline or maybe it was a million and a half.
Steve Sakwa: Okay. Great. And maybe just to go back, again, I'm just trying to make sure I had the facts right. I think you said there was like 1 million sq ft of pipeline, or maybe it was 1.5 million. Could you just maybe provide a little more color on the overall pipeline, just kind of broadly by market? And where are you seeing kind of the most demand, either by product type or whether it's life science office, and in which submarkets?
Steve Sakwa: Okay. Great. And maybe just to go back, again, I'm just trying to make sure I had the facts right. I think you said there was like 1 million sq ft of pipeline, or maybe it was 1.5 million. Could you just maybe provide a little more color on the overall pipeline, just kind of broadly by market? And where are you seeing kind of the most demand, either by product type or whether it's life science office, and in which submarkets?
Speaker #5: Could you just maybe provide a little more color on the overall pipeline, and just kind of broadly by market? Where are you seeing the most demand, either by product type or whether it's life science, office, and in which submarkets?
Speaker #2: Yeah. And again, George and I will tag team. Look, I think from where we're clearly seeing the strongest trend lines at this point are really in CBD Philadelphia University City.
Gerard H. Sweeney: Yeah. And again, George and I will tag team. Look, I think from where we're clearly saying the strongest trend lines at this point are really in CBD, Philadelphia University City. I think, as I noted in the prepared comments, we've really been able to drive effective rents there. I think that's really a function of I think demand levels are returning to pre-COVID levels. For example, in 2025, we saw the highest level of new deal volume in the past five years. So certainly, things seem to be accelerating. Certainly, the inventory is shrinking. So there's been a number of properties that are either in some level of financial strain or in the process of being evaluated for residential conversion. So we do expect that somewhere between 10% and 15% of the inventory here in the CBD will be converted to residential.
Gerard H. Sweeney: Yeah. And again, George and I will tag team. Look, I think from where we're clearly saying the strongest trend lines at this point are really in CBD, Philadelphia University City. I think, as I noted in the prepared comments, we've really been able to drive effective rents there. I think that's really a function of I think demand levels are returning to pre-COVID levels. For example, in 2025, we saw the highest level of new deal volume in the past five years. So certainly, things seem to be accelerating. Certainly, the inventory is shrinking. So there's been a number of properties that are either in some level of financial strain or in the process of being evaluated for residential conversion. So we do expect that somewhere between 10% and 15% of the inventory here in the CBD will be converted to residential.
Yeah. Uh, and again, George and I will tag team. I, you know, look, I think from, you know, we're clearly saying the strongest trend lines at this point are really in, uh, in CBD, Philadelphia University City. I think, uh, as I noted in the prepared comments, we've really been able to drive effective rents there. I think that's a, really, a function of, you know, I think that man levels are, are, are returning to preco levels, uh, the uh, you know, in in, for example, in 25 of New Deal volume in the past 5 years. So certainly things seem to be accelerating. Uh certainly the inventory is shrinking
Speaker #2: I think, as I noted in the prepared comments, we've really been able to drive effective rents there. I think that's really a function of I think demand levels are returning to pre-COVID levels.
Speaker #2: For example, in '25, we saw the highest level of new deal volume in the past five years. So, certainly things seem to be accelerating.
Speaker #2: Certainly, the inventory is shrinking. So, there's been a number of properties that are either in some level of financial strain or in the process of being evaluated for residential conversion.
Speaker #2: So we do expect that somewhere between 10 and 15 percent of the inventory here in the CBD will be converted to residential. State had passed a 20-year tax abatement for office to residential conversions.
Gerard H. Sweeney: state had passed a 20-year tax abatement for office-to-residential conversions. The city is evaluating that as well. So we think that'll spur some additional inventory decreases. We've actually been pretty pleased with the pickup in activity in Radnor, Pennsylvania, and King of Prussia. We've seen some very good activity there as well. And in terms of the and now, George, let me just cover the development. And on the development side, 3151, look, that pipeline remains very robust. We actually have proposals outstanding to a number of tenants. It's about 60% office, 40% life science. Look, we understand that we're trying to get all those transactions across the finish line as quickly as possible. We know the project's being very well received. We're not really receiving any pushback on the proposed economics. So we remain encouraged by the level of tour activity coming through that building.
Gerard H. Sweeney: state had passed a 20-year tax abatement for office-to-residential conversions. The city is evaluating that as well. So we think that'll spur some additional inventory decreases. We've actually been pretty pleased with the pickup in activity in Radnor, Pennsylvania, and King of Prussia. We've seen some very good activity there as well. And in terms of the and now, George, let me just cover the development. And on the development side, 3151, look, that pipeline remains very robust. We actually have proposals outstanding to a number of tenants. It's about 60% office, 40% life science. Look, we understand that we're trying to get all those transactions across the finish line as quickly as possible. We know the project's being very well received. We're not really receiving any pushback on the proposed economics. So we remain encouraged by the level of tour activity coming through that building.
So there's been a number of properties that are either, uh, uh, uh, in some level of financial strain or in the process of of being evaluated for residential conversion. So we do expect that, you know, somewhere between 10 and 15% of the inventory, here in the CBD will be converted to residential, uh, state had passed a uh, a 20-year tax abatement for office to residential conversions. The city is evaluating that as well. So we think that will spur some additional inventory decreases. We've actually been pretty pleased with the pickup and activity in, uh, in Radnor Pennsylvania and King of Prussia. We've seen some very good activity there as well. Uh, and in terms of the, you know, the George, let me just cover the uh, the development and on the development side, 3151 look that pipeline remains very robust. We actually have proposals outstanding to a number of tenants. It's about 60% office, 40% life science. Uh, look, we understand
Speaker #2: The city has evaluating that as well. So we think that'll spur some additional inventory decreases. We've actually been pretty pleased with the pickup in activity in Radnor, Pennsylvania, and King of Prussia.
Speaker #2: We've seen some very good activity there as well. And in terms of the — and George, let me just cover the development. And on the development side, 3151, look, that pipeline remains very robust.
Speaker #2: We actually have proposals outstanding to a number of tenants. It's about 60 percent office, 40 percent life science. Look, we understand that we're trying to get all those transactions across the finish line as quickly as possible.
That we're trying to get all those transactions across the Finish Line as quickly as possible. Uh, we know the Project's being very well received. We're not really receiving any push back on the, uh, on the proposed economics. Uh, so we're, we remain encouraged by the level of Tours activity coming through that building. And then finally, it went up 10, you know, really with the uh, the size of the tenants, there we have between 5 and 50,000 square feet. We feel as though we're in very good shape to meet all, our leasing objectives,
Speaker #2: We know the project's being very well received. We're not really receiving any pushback on the proposed economics, so we remain encouraged by the level of tour activity coming through that building.
Speaker #2: And then finally, at one Uptown, really with the size of the tenants there, we have between 5 and 50 thousand square feet. We feel as though we're in very good shape to meet all our leasing objectives there.
Gerard H. Sweeney: And then finally, at One Uptown, really, with the size of the tenants there, we have between 5,000 and 50,000 sq ft. We feel as though we're in very good shape to meet all our leasing objectives there. But George, in terms of overall operating portfolio?
Gerard H. Sweeney: And then finally, at One Uptown, really, with the size of the tenants there, we have between 5,000 and 50,000 sq ft. We feel as though we're in very good shape to meet all our leasing objectives there. But George, in terms of overall operating portfolio?
Speaker #2: But George, in terms of overall operating portfolio—yeah, I think the operating portfolio, the pipeline, remains fairly consistent. We're at 1.5 million square feet today.
[Analyst] (JPMorgan Chase): Yeah. I think the operating portfolio, the pipeline remains fairly consistent. We're at 1.5 million sq ft today. Last quarter, we were at 1.7. And then we executed about 200,000 sq ft of that 1.7. So every time we seem to execute a lease, we're generating more, as Jerry mentioned, in the pickup and overall tours. So I think the spaces all show well, getting plenty of activity. We're seeing good levels of conversion. And it really comes down to converting this very robust pipeline at 3151. And then at One Uptown, really, with three floors to lease, one of them kind of with an expansion rate encumbrance, we've got a pipeline that's almost 3x the available amount of sq ft we have.
George Johnstone: Yeah. I think the operating portfolio, the pipeline remains fairly consistent. We're at 1.5 million sq ft today. Last quarter, we were at 1.7. And then we executed about 200,000 sq ft of that 1.7. So every time we seem to execute a lease, we're generating more, as Jerry mentioned, in the pickup and overall tours. So I think the spaces all show well, getting plenty of activity. We're seeing good levels of conversion. And it really comes down to converting this very robust pipeline at 3151. And then at One Uptown, really, with three floors to lease, one of them kind of with an expansion rate encumbrance, we've got a pipeline that's almost 3x the available amount of sq ft we have.
Speaker #2: Last quarter, we were at 1.7, and then we executed about 200,000 square feet of that 1.7. So every time we seem to execute a lease, we're generating more as Jerry mentioned in the pickup and overall tours.
and then at 1 Uptown, you know really uh you know with 3 floors to lease 1 of them kind of with an expansion right encumbrance uh you know we've got a pipeline that's almost 3x, the available amount of square feet we have
Great. Thank you.
Thank you, Steve.
Speaker #2: So I think the space is all showing well. Getting plenty of activity. We're seeing good levels of conversion. And it really comes down to converting this very robust pipeline at 3151.
Thank you. And our next question comes from the line of upall Rena from keybanc, Capital markets your question, please.
Speaker #2: And then at one Uptown, really with three floors to lease, one of them kind of with an expansion right encumbrance, we've got a pipeline that's almost 3x the available amount of square feet we have.
Great. Thank you. Uh, Jerry do you have a update on the uh, IBM move out in Austin? You know, 1 of the footnotes in your 26 business plan states that you plan on redeveloping uh 1 existing ATX building. Uh so just want to get some details on that.
Speaker #5: Great. Thank you.
Steve Sakwa: Great. Thank you.
Steve Sakwa: Great. Thank you.
Gerard H. Sweeney: Thank you, Steve.
Gerard H. Sweeney: Thank you, Steve.
Uh yeah, great question. Good morning. Uh yeah. Certainly, you know, as as uh, been previously disclosed, you know, IBM will be rolling out of their space at, uh, our Uptown development, uh, in the, uh, starting in the at the end of the first quarter of next year, uh, uh,
Operator: Thank you. Our next question comes from the line of Upal Rana from KeyBank Capital Markets. Your question, please.
Operator: Thank you. Our next question comes from the line of Upal Rana from KeyBank Capital Markets. Your question, please.
Speaker #1: Thank you, Steve. And our next question comes from the line of Upaul Rena with KeyBanc Capital Markets. Your question,
Speaker #1: please. Great.
[Analyst] (KeyBank Capital Markets): Great. Thank you. Jerry, do you have an update on the IBM move out in Austin? One of the footnotes in your '26 business plan states that you plan on redeveloping one existing ATX building. So I just want to get some details on that.
Upal Rana: Great. Thank you. Jerry, do you have an update on the IBM move out in Austin? One of the footnotes in your '26 business plan states that you plan on redeveloping one existing ATX building. So I just want to get some details on that.
Speaker #2: Thank you. Jerry, do you have an update on the IBM move-out in Austin? One of the footnotes in your 26 business plans states that you plan on redeveloping one existing ATX building.
Speaker #2: So I just want to get some details on
Speaker #2: that. Yeah.
Gerard H. Sweeney: Yeah. Great question. Good morning. Yeah. Certainly, as has been previously disclosed, IBM will be rolling out of their space at our uptown development starting at the end of Q1 next year. In addition, as we've mentioned before, we did receive a significant modification to our uptown approvals last year that gave us the ability to do much more increased density throughout the 66-acre park. So as part of that, in looking at the market demand drives and certainly, that northwest market remains fairly typically in the domain area, we are looking at again, this is a function of how the sales program goes and a few other functions. But our 2026 business plan, excuse me, does contemplate us commencing redevelopment of one of the existing buildings. That building is currently vacant. It consists of about 157,000 sq ft.
Gerard H. Sweeney: Yeah. Great question. Good morning. Yeah. Certainly, as has been previously disclosed, IBM will be rolling out of their space at our uptown development starting at the end of Q1 next year. In addition, as we've mentioned before, we did receive a significant modification to our uptown approvals last year that gave us the ability to do much more increased density throughout the 66-acre park. So as part of that, in looking at the market demand drives and certainly, that northwest market remains fairly typically in the domain area, we are looking at again, this is a function of how the sales program goes and a few other functions. But our 2026 business plan, excuse me, does contemplate us commencing redevelopment of one of the existing buildings. That building is currently vacant. It consists of about 157,000 sq ft.
Speaker #3: Great question. Good morning. Yeah, certainly, as been previously disclosed, IBM will be rolling out of their space at our Uptown development in the starting at the end of the first quarter of next year.
In addition, you know, as as we've mentioned before we did receive a significant modification to our Uptown approvals last year. They gave gave us the ability to do much more increased density throughout the uh, 66 acre Park. So as part of that in, in looking at the market demand drops and certainly that Northwest Market, uh, remains fairly in the domain area. Uh, you know, we are, we are looking at again, this is a function of how how the sails program goes in the
Speaker #3: In addition, as we've mentioned before, we did receive a significant modification to our Uptown approvals last year that gave us the ability to do much more increased density throughout the 66-acre park.
Speaker #3: So as part of that, in looking at the market demand drivers, and certainly that Northwest market remains fairly tactically in the domain area, we are looking at, again, this is a function of how the sales program goes and a few other functions, but our 26 business plan, excuse me, does contemplate as commencing redevelopment of one of the existing buildings.
Speaker #3: That building is currently vacant. It consists of about 157,000 square feet. We anticipate the renovation cost would be somewhere in the 30 to 40 million dollar range.
Gerard H. Sweeney: We anticipate the renovation cost would be somewhere in the $30 to 40 million range. We can complete that within a 3- to 4-quarter period. We have done a marketing launch on that. And we've been very, very pleased with the results. We have about 600,000 sq ft of potential prospects there. Pricing levels would be about 20% to 15% below the rents required at One Uptown. And we're targeting everything to a cash yield north of 8%. So all the planning for that, Upal, is underway. We're waiting for the other elements of our capital plan to really come together. But we'll continue the marketing process for that first building. Then following that, could be two other buildings that would probably go through the same program around the same cost and economic metrics as the first building.
Gerard H. Sweeney: We anticipate the renovation cost would be somewhere in the $30 to 40 million range. We can complete that within a 3- to 4-quarter period. We have done a marketing launch on that. And we've been very, very pleased with the results. We have about 600,000 sq ft of potential prospects there. Pricing levels would be about 20% to 15% below the rents required at One Uptown. And we're targeting everything to a cash yield north of 8%. So all the planning for that, Upal, is underway. We're waiting for the other elements of our capital plan to really come together. But we'll continue the marketing process for that first building. Then following that, could be two other buildings that would probably go through the same program around the same cost and economic metrics as the first building.
A few other functions but you know, our our 26 business plan, excuse me, does contemplate, you know, as commencing Redevelopment of 1 of the existing buildings. Uh, that building is currently vacant uh consists of about 157,000 square feet. We anticipate the uh, the renovation cost would be somewhere in the 30 to 40 million dollar range and we can complete that, you know, within a, a 3 to 4 quarter period. Uh we have done some marketing launch on that and uh been very very pleased with the results we have about 600,000 square feet of potential prospects, their pricing levels would be about 20 to 15% below the rents required at 1, Uptown and we're targeting everything to a cash yield north of 8%. So, all the planning for that. Oop Paul is underway. Uh, we're waiting for the other elements for our Capital plan to really come together. Uh, but we'll continue the marketing process for those. Uh, for first that first build
Speaker #3: complete that within And we can a three to four quarter period. We have done some marketing launch on that. And we've been very, very pleased with the results we have.
Then uh following that can be 2. That would probably go through the same program around the same cost of economic metrics is the first building
Speaker #3: We got about 600,000 square feet of potential prospects there. Pricing levels would be about 20 to 15 percent below the rents required at one Uptown.
Speaker #3: And we're targeting everything to a cash yield north of 8%. So all the planning for that, Upaul, is underway. We're waiting for the other elements of our capital plan to really come together.
Okay, great. That was helpful. Um, and then, you know, on on the dispositions. Um, you know, you went through a few of the Assets in the markets, uh, that you that you want to, uh, dispose some Assets in, you know, I thought of those that you've identified, are there other properties that could, you know, come up for sale that could occur this year or, uh, you know, could be up for consideration.
Speaker #3: But we'll continue the marketing process for those for first that first building, then following that could be two other buildings that would probably go through the same program around the same cost and economic metrics as the first building.
27. I'm just trying to understand if the the 300 million for this year, is sort of, is sort of it or you. And after that, you would feel comfortable with the core portfolio going forward.
Speaker #2: Okay, great. That was helpful. And then, on the dispositions, you went through a few of the assets in the markets that you want to dispose of, some assets in.
[Analyst] (KeyBank Capital Markets): Okay. Great. That was helpful. Then on the dispositions, you went through a few of the assets in the markets that you want to dispose some assets in. Outside of those that you've identified, are there other properties that could come up for sale that could occur this year or could be up for consideration in 2027? I'm just trying to understand if the $300 million for this year is sort of it, or after that, you'd feel comfortable with the core portfolio going forward?
Upal Rana: Okay. Great. That was helpful. Then on the dispositions, you went through a few of the assets in the markets that you want to dispose some assets in. Outside of those that you've identified, are there other properties that could come up for sale that could occur this year or could be up for consideration in 2027? I'm just trying to understand if the $300 million for this year is sort of it, or after that, you'd feel comfortable with the core portfolio going forward?
Speaker #2: Outside of those that you've identified, are there other properties that could come up for sale that could occur this year, or could be up for consideration in '27?
Speaker #2: I'm just trying to understand if the $300 million for this year is sort of it, or after that you'd feel comfortable with the core portfolio going.
Speaker #2: forward?
Speaker #3: No,
Gerard H. Sweeney: No. Look, great question. I think the target for this year is the $280 to 300 million. But we have a number of other properties, including some land holdings, that we're queuing up for sale as investment market conditions continue to improve. So certainly, with the market being what it is, we've taken a hard look at where we really do expect to be able to generate outsized growth from each of our different assets. And as I alluded to earlier, where we really think that we're going to be treading economic water in some of these properties because of changes in submarket conditions or, frankly, changes in tenant appetites in terms of what they classify as A versus B or B plus, we're certainly taking a hard look at that.
Gerard H. Sweeney: No. Look, great question. I think the target for this year is the $280 to 300 million. But we have a number of other properties, including some land holdings, that we're queuing up for sale as investment market conditions continue to improve. So certainly, with the market being what it is, we've taken a hard look at where we really do expect to be able to generate outsized growth from each of our different assets. And as I alluded to earlier, where we really think that we're going to be treading economic water in some of these properties because of changes in submarket conditions or, frankly, changes in tenant appetites in terms of what they classify as A versus B or B plus, we're certainly taking a hard look at that.
Speaker #3: look, great question. I think the target for this year is the 280 to 300 million dollars. But we have a number of other properties, including some land holdings, that we're queuing up for sale as investment market conditions continue to improve.
Speaker #3: So, certainly with the market being what it is, we've taken a hard look at where we really do expect to be able to generate outsized growth from each of our different assets.
No, look, I I a great question. I I think the target for this year is that is, you know, that that 280 to 300 million dollars. But we have a number of other properties including some land Holdings, uh, that were queuing up for sale as marked as investment market conditions, continue to improve. So, uh, uh, certainly with the with the, uh, uh, the market being what it is. We've taken a hard look at where we really do expect to be able to generate outsized growth from each of our different assets. And as I alluded to earlier, where we really think that we're going to be, uh, you know, treading economic water in some of these properties because it changes in submarket. Conditions are frankly changed in, uh, in in, in tenant, appetites, uh, in terms of what they classify as a versus, uh, a versus b or B+. Uh, we're currently taking a hard look at that. So we would expect to have a level of dispositions program for uh, for 2027 as well. Uh,
and have that dovetail with uh the the developments fully stabilizing.
Okay, great. Thank you.
Speaker #3: And as I alluded to earlier, what we really think that we're going to be treading economic water, in some of these properties, because it changes in submarket conditions, or frankly, changes in tenant appetites.
Thank you. And our next question comes from the line of Dylan berzinski from Green Street. Your question, please?
Speaker #3: In terms of what they classify as A versus B or B plus. We're certainly taking a hard look at that. So we would expect to have a level of dispositions program for 2027 as well.
Gerard H. Sweeney: So we would expect to have a level of dispositions program for 2027 as well and have that dovetail with the developments fully stabilizing.
Gerard H. Sweeney: So we would expect to have a level of dispositions program for 2027 as well and have that dovetail with the developments fully stabilizing.
Speaker #3: with the developments fully And have that dovetail stabilizing.
Speaker #2: Okay. Great. Thank
[Analyst] (KeyBank Capital Markets): Okay. Great. Thank you.
Upal Rana: Okay. Great. Thank you.
Speaker #2: you. Thank
As a very opportunistic, share price.
Operator: Thank you. And our next question comes from the line of Dylan Bersinski from Green Street. Your question, please.
Operator: Thank you. And our next question comes from the line of Dylan Bersinski from Green Street. Your question, please.
Speaker #1: you. And our next question comes from the line of Dylan Berzynski from Green Street. Your question,
Uh, I'm sorry Dale and you cut after the, the last part of that. I apologize. Could you repeat?
Speaker #1: please. Hi, guys.
[Analyst] (Green Street): Hi guys. Good morning. Thanks for taking the question. Just sort of going back to, Jerry, your comments around wanting to use the initial capital from dispositions to de-lever and then anything after that going to share buybacks. Can you kind of just talk about sort of the internal conversations that you guys have and thinking about the right level of leverage to operate at before going into share buybacks and trying to take advantage of what you guys view as a very opportunistic share price?
Dylan Burzinski: Hi guys. Good morning. Thanks for taking the question. Just sort of going back to, Jerry, your comments around wanting to use the initial capital from dispositions to de-lever and then anything after that going to share buybacks. Can you kind of just talk about sort of the internal conversations that you guys have and thinking about the right level of leverage to operate at before going into share buybacks and trying to take advantage of what you guys view as a very opportunistic share price?
Speaker #4: Good morning, and thanks for taking the question. Just sort of going back to, Jerry, your comments around wanting to use the initial capital from dispositions to de-lever, and then anything after that going to share buybacks.
Yeah, just just trying to get a sense for how you guys internally, think about, you know, the deleveraging process and balancing that with share BuyBacks. Just is there a certain leverage Target in mind longer term that you guys eventually want to get to before you really start to kick the share buyback into the year.
Speaker #4: Can you kind of just talk about sort of the internal conversations that you guys have and thinking about the right level of leverage to operate at before going into share buybacks and trying to take advantage of what you guys view as a very opportunistic share price?
Speaker #3: I'm sorry, Dylan, you cut out after the last part, so I apologize. Could you—
Gerard H. Sweeney: I'm sorry, Dylan. You cut after the last part of that. I apologize. Could you repeat?
Gerard H. Sweeney: I'm sorry, Dylan. You cut after the last part of that. I apologize. Could you repeat?
Speaker #3: repeat? Yeah.
[Analyst] (Green Street): Yeah. Just trying to get a sense for how you guys internally think about the de-leveraging process and balancing that with share buybacks. Just, is there a certain leverage target in mind longer term that you guys eventually want to get to before you really start to kick the share buyback into gear?
Dylan Burzinski: Yeah. Just trying to get a sense for how you guys internally think about the de-leveraging process and balancing that with share buybacks. Just, is there a certain leverage target in mind longer term that you guys eventually want to get to before you really start to kick the share buyback into gear?
Speaker #4: Just trying to get a sense for how you guys internally think about the de-leveraging process and balancing that with share buybacks. Just is there a certain leverage target in mind longer term that you guys eventually want to get to before you really start to kick the share buyback into gear?
Speaker #3: Yeah. Look, I think as we look at our strategic direction, certainly we want to get our leverage metric to be fully back on the investment grade ladder, which is typically evidenced by a fixed charge coverage well north of two.
Gerard H. Sweeney: Yeah. Look, I think as we look at our strategic direction, certainly, we want to get our leverage metric to be fully back on the investment-grade ladder, which is typically evidenced by a fixed charge coverage well north of 2, and a net debt to EBITDA somewhere in the low to mid-7s. I think we do view that, as we've talked about, as being a multiple-year plan. That can certainly be accomplished by asset sales, as we've laid out, certainly increasing NOI. We do have a number of, I think, good programs underway to increase absorption throughout our existing portfolio, as well as these development projects coming online and being recapitalized. As we look at it strategically, those development projects coming online can bring on about $27 million of incremental NOI. That's a significant amount per share. We look at all that from a matrix standpoint.
Gerard H. Sweeney: Yeah. Look, I think as we look at our strategic direction, certainly, we want to get our leverage metric to be fully back on the investment-grade ladder, which is typically evidenced by a fixed charge coverage well north of 2, and a net debt to EBITDA somewhere in the low to mid-7s. I think we do view that, as we've talked about, as being a multiple-year plan. That can certainly be accomplished by asset sales, as we've laid out, certainly increasing NOI. We do have a number of, I think, good programs underway to increase absorption throughout our existing portfolio, as well as these development projects coming online and being recapitalized. As we look at it strategically, those development projects coming online can bring on about $27 million of incremental NOI. That's a significant amount per share. We look at all that from a matrix standpoint.
Yeah. Look, I, I think as, as as uh, we look at our, our strategic Direction, certainly, we want to get our leverage metrics, uh, to be fully back on the investment grade ladder, which is typically evidenced by a fixed charge coverage. You know, well north of 2 and a net debt to ibida somewhere in the low, to mid 77s. So, I think we do view that as we've talked about it being a multiple year plan, uh, and that can certainly be accomplished by asset sales as we've laid out. Uh, certainly increasing noi. Uh, so we do have a number of uh, of I think a good programs under the way to increase absorption throughout our existing portfolio as well as these development, projects coming online and being recapitalized as as a as you know we look at as strategically those development projects coming online can bring on about 27 million dollars of an of incremental noi. That's
Speaker #3: And a net debt to EBITDA somewhere in the low to mid-sevens. So I think we do view that as we've talked about it being a multiple-year plan.
Speaker #3: Certainly, this can be accomplished by asset sales. As we've laid out, certainly increasing NOI, and that can—so we do have a number of, I think, good programs underway to increase absorption throughout our existing portfolio.
Speaker #3: As well as these development projects coming online and being recapitalized. As we look at it strategically, those development projects coming online can bring on about 27 million dollars of incremental NOI.
A significant amount per share. So we we look at all that from a matrix standpoint. Uh, the the bias right now is to is to deliver but we're also very cognizant of the undervaluation of our public Securities. Uh, and that's 1 of the reasons why we continue to look at. Are there other ways for us to accelerate land sales? Other building sales to actually generate more than ample liquidity, maintained on the positive absorption positive earnings growth track and be in the market to be able to buy back shares.
Speaker #3: That's a significant amount per share. So we look at all that from a matrix standpoint. The bias right now is to de-lever, but we're also very cognizant of the undervaluation of our public securities.
Gerard H. Sweeney: The bias right now is to de-lever. But we're also very cognizant of the undervaluation of our public securities. And that's one of the reasons why we continue to look at, are there other ways for us to accelerate land sales, other building sales to actually generate more than ample liquidity, maintain on the positive absorption, positive earnings growth track, and be in the market to be able to buy back shares?
Gerard H. Sweeney: The bias right now is to de-lever. But we're also very cognizant of the undervaluation of our public securities. And that's one of the reasons why we continue to look at, are there other ways for us to accelerate land sales, other building sales to actually generate more than ample liquidity, maintain on the positive absorption, positive earnings growth track, and be in the market to be able to buy back shares?
That's helpful. Thanks Jerry. And then I guess, just on on the the the developing projects outside of Austin for the ones in in the University of city of Philadelphia. I mean, are those potential disposition candidates as you stabilize? Those are those sort of off the the disposition candidate list for the time being
Speaker #3: And that's one of the reasons why we continue to look at, are there other ways for us to accelerate land sales, other building sales, to actually generate more than ample liquidity, maintain on the positive absorption, positive earnings growth track, and be in the market to be able to buy back shares.
Speaker #4: That's helpful. Thanks, Jerry. And then I guess just on the development projects outside of Austin, so the ones in University City, Philadelphia. I mean, are those potential disposition candidates as you stabilize those, or are those sort of off the disposition candidate list for the time being?
[Analyst] (Green Street): That's helpful. Thanks, Jerry. And then I guess just on the development projects outside of Austin, so the ones in University City, Philadelphia, I mean, are those potential disposition candidates as you stabilize those? Or are those sort of off the disposition candidate list for the time being?
Dylan Burzinski: That's helpful. Thanks, Jerry. And then I guess just on the development projects outside of Austin, so the ones in University City, Philadelphia, I mean, are those potential disposition candidates as you stabilize those? Or are those sort of off the disposition candidate list for the time being?
Speaker #3: No, they're not off the sale list at all. In fact, certainly one of the things we keep in the top of our mind is on 3025.
Gerard H. Sweeney: No. They're not off the sale list at all. In fact, certainly, one of the things we keep in the top of our mind is on 3025. We have an extremely well-performing residential project there. Our initial thinking is we're going to be evaluating a refinancing of that so we can significantly reduce the carrying cost of that debt. But certainly, a joint venture on that residential component is not entirely off the table. And then I think on 3151, as that project gets more visibility on lease-ups, certainly, talking to other capital partners about that would be on the radar screen as well. That will all be dovetailed with how we're doing with other elements of our business plan. Because as we do look at these developments, I mean, they are top-of-market, incredibly high quality, extremely well-located, with significant growth-driving characteristics for us.
Gerard H. Sweeney: No. They're not off the sale list at all. In fact, certainly, one of the things we keep in the top of our mind is on 3025. We have an extremely well-performing residential project there. Our initial thinking is we're going to be evaluating a refinancing of that so we can significantly reduce the carrying cost of that debt. But certainly, a joint venture on that residential component is not entirely off the table. And then I think on 3151, as that project gets more visibility on lease-ups, certainly, talking to other capital partners about that would be on the radar screen as well. That will all be dovetailed with how we're doing with other elements of our business plan. Because as we do look at these developments, I mean, they are top-of-market, incredibly high quality, extremely well-located, with significant growth-driving characteristics for us.
No, I they're not off the off the the sale list at all. In fact, you know, certainly 1 of the things we uh we keep in the top of our mind is on on uh 3025. We have a extremely well-performing residential project there. You know, our initial thinking is we're going to be we uh evaluating uh a refinancing of that. So we can significantly reduce the carrying cost of that debt. But certainly a joint venture on that residential component, it is not entirely off the table. And then I think on 3151 uh, as that project gets more visibility on lease up, certainly talking to other Capital Partners about that would be would be on the radar screen as well. Uh that will all be dubbed.
Speaker #3: We have an extremely well-performing residential project there. Our initial thinking is we're going to be evaluating a refinancing of that so we can significantly reduce the carrying costs of that debt.
Speaker #3: But certainly, a joint venture on that residential is entirely off the table. And then I think on 3151, as that project gets more visibility on lease-up, certainly talking to other capital partners about that would be on the radar screen as well.
Tell with how we're dealing with other elements of our business plan. Because as we do look at these developments I mean they are top of Market incredibly high quality extremely well-located with significant growth driving characteristics for us. So, you know, our preference is to hold on to the really high quality stuff we have in our portfolio and to generate additional sales proceeds, look at other things that, as I mentioned, on 1 of the previous questions, may not be as
Robust in their forward, growth projections. If, if that's helpful.
No, that's the treatment help with J. I really appreciate the time, thanks.
Yeah.
Speaker #3: That will all be dovetailed with how we're doing with other elements of our business plan. Because as we do look at these developments, I mean, they are top-of-market, incredibly high quality, extremely well located, with significant growth-driving characteristics for us.
Thank you. And our next question comes from the line of Michael Lewis from truist. Securities your question, please.
Speaker #3: So our preference is to hold on to the really high-quality stuff we have in our portfolio and to generate additional sales proceeds. Look at other things that, as I mentioned on one of the previous questions, may not be as robust in their forward growth projections.
Gerard H. Sweeney: So our preference is to hold on to the really high-quality stuff we have in our portfolio and to generate additional sales proceeds: look at other things that, as I mentioned on one of the previous questions, may not be as robust in their forward growth projections, if that's helpful.
Gerard H. Sweeney: So our preference is to hold on to the really high-quality stuff we have in our portfolio and to generate additional sales proceeds: look at other things that, as I mentioned on one of the previous questions, may not be as robust in their forward growth projections, if that's helpful.
Speaker #3: If that's
Speaker #3: Helpful. No, that's extremely helpful, Jerry.
[Analyst] (Green Street): No. That's extremely helpful, Jerry. I really appreciate the time. Thanks.
Dylan Burzinski: No. That's extremely helpful, Jerry. I really appreciate the time. Thanks.
Speaker #4: I really appreciate the time. Thanks.
Speaker #3: Thank
Speaker #3: you.
Gerard H. Sweeney: Thank you.
Gerard H. Sweeney: Thank you.
Thank you. Um, so you talked about what you want to sell, I wanted to ask a question a little bit more pointed about the use of the proceeds, right? So the the 8 and a half percent bonds maturing in 28 is, is that really what we're talking about? It looks like those are trading at like a 560 yield, right? So if I just summarized it, you know, what kind of cap rate do you expect when you sell the assets and then can I assume that the proceeds will be used to pay 8 and a half percent bonds at 56 or 57?
Operator: Thank you. Our next question comes from the line of Michael Lewis from Truist Securities. Your question, please.
Operator: Thank you. Our next question comes from the line of Michael Lewis from Truist Securities. Your question, please.
Speaker #1: Thank
Speaker #1: you. And our next question comes from the line of Michael Lewis from True Securities. Your question,
Speaker #1: please. Thank you.
Michael Lewis: Thank you. So you talked about what you want to sell. I wanted to ask a question a little bit more pointed about the use of the proceeds, right? So the 8.5% bonds maturing in 2028, is that really what we're talking about? It looks like those are trading at a 5.6 yield, right? So if I just summarize it, what kind of cap rate do you expect when you sell the assets? And then can I assume that the proceeds will be used to pay 8.5% bonds at 5.6 or 5.7?
Michael Lewis: Thank you. So you talked about what you want to sell. I wanted to ask a question a little bit more pointed about the use of the proceeds, right? So the 8.5% bonds maturing in 2028, is that really what we're talking about? It looks like those are trading at a 5.6 yield, right? So if I just summarize it, what kind of cap rate do you expect when you sell the assets? And then can I assume that the proceeds will be used to pay 8.5% bonds at 5.6 or 5.7?
Speaker #5: So you talked about what you want to sell. I wanted to ask a question a little bit more pointed about the use of the proceeds, right?
Speaker #5: So the 8.5% bonds maturing in '28, is that really what we're talking about? It looks like those are trading at like a 5.6 yield, right?
Speaker #5: So, if I just summarize it, what kind of cap rate do you expect when you sell? I assume that the proceeds will be used to pay 8.5% bonds at 5.6 or 5.7?
Speaker #3: Well, it's a two-part question. Tom will pick up the second part. I think when we're looking at, Michael, and good morning, when we look at the sales program, we are looking at an average cap rate of about 8% based upon the visibility we have from the marketplace today.
Gerard H. Sweeney: Well, I think a two-part question. Tom will pick up the second part. I think when we're looking at Michael Lethy and good morning. When we look at the sales program, we are looking at an average cap rate of about 8% based upon the visibility we have from the marketplace today. That obviously will range from lower single digits to higher single digits based upon the asset and the submarket location. So we feel very good about both the timing expectations we have and the value proposition we think we can generate from those sales. But Tom, maybe share some thoughts on the application of those proceeds.
Gerard H. Sweeney: Well, I think a two-part question. Tom will pick up the second part. I think when we're looking at Michael Lethy and good morning. When we look at the sales program, we are looking at an average cap rate of about 8% based upon the visibility we have from the marketplace today. That obviously will range from lower single digits to higher single digits based upon the asset and the submarket location. So we feel very good about both the timing expectations we have and the value proposition we think we can generate from those sales. But Tom, maybe share some thoughts on the application of those proceeds.
Speaker #3: That obviously will range from lower single digits to higher single digits, based upon the asset and the submarket location. So, we feel very good about both the timing expectations we have and the value proposition we think we can generate from those sales.
Speaker #3: But Tom, maybe share some thoughts on the application of those proceeds.
Speaker #2: Yeah. Hi, Michael. When we look at the application of the proceeds A timing of when those sales occur, but as you know, we still have some development dollars left to spend.
[Company Representative] (Brandywine Realty Trust): Yeah. Hi, Michael. When we look at the application, the proceeds, the timing of when those sales occur. But as you know, we still have some development dollars left to spend. So we will always be trying to keep the line as close to zero as possible. But also, as we see those sales come in and the line is near zero, one of the areas we are targeting is maybe buying in some of our bonds separately. And the '28s are a good example. At a 106 or even inside of that, we can buy back some of those bonds on the open market. If we got a lot of sales done, we could also make it sort of a formal tender. But we're definitely thinking about some of the higher-priced bonds, taking them out early. It does help with near-term impact to fixed charge.
Thomas E. Wirth: Yeah. Hi, Michael. When we look at the application, the proceeds, the timing of when those sales occur. But as you know, we still have some development dollars left to spend. So we will always be trying to keep the line as close to zero as possible. But also, as we see those sales come in and the line is near zero, one of the areas we are targeting is maybe buying in some of our bonds separately. And the '28s are a good example. At a 106 or even inside of that, we can buy back some of those bonds on the open market. If we got a lot of sales done, we could also make it sort of a formal tender. But we're definitely thinking about some of the higher-priced bonds, taking them out early. It does help with near-term impact to fixed charge.
Speaker #2: So we will always be trying to keep the line as close to zero as possible. But also, as we see those sales come in and the line is near zero, one of the areas we are targeting is maybe buying in some of our bonds separately.
And so we will always be trying to keep the line as close to zero as possible. But also as we see those sales come in in the line is near zero. 1 of the areas we are targeting is is maybe buying in some of our bonds uh, separately. And the 28s are, are a good example, uh, at a at a 106 or even inside of that, we can buy back some of those Bonds on the open market. If we got a lot of sales done, we could also make it sort of a, a formal tender but we're definitely thinking about uh, some of the higher price bonds, taking them out early. It does help with near-term impact to, to fixed charge. So we will, we will be focusing on on the higher priced ones, but near the, you know, knowing that we have maturities coming up, focusing more on the near-term, 28s.
As opposed to something further out.
Speaker #2: And the '28s are a good example. At 106 or even inside of that, we can buy back some of those bonds on the open market if we get a lot of sales done.
Speaker #2: We could also make it sort of a formal tender, but we're definitely thinking about some of the higher-priced bonds—taking them out early.
Speaker #2: It does help with near-term impact to fixed charge. So we will be focusing on the higher-priced ones, but knowing that we have maturities coming up, focusing more on the near-term '28s.
[Company Representative] (Brandywine Realty Trust): So we will be focusing on the higher-priced ones. But knowing that we have maturities coming up, focusing more on the near-term '28s as opposed to something further out.
Thomas E. Wirth: So we will be focusing on the higher-priced ones. But knowing that we have maturities coming up, focusing more on the near-term '28s as opposed to something further out.
Okay? That makes sense. And then my second question you know you talked about all the things you're kind of exploring, right? So the stock price is below 3 dollars. I think consensus any of these is 8 dollars. Um, so some of those things could be shared BuyBacks. If you get the leverage down, you know, has the board talked at all or thought about any kind of a, you know, a recap or you know, is their m&a interest out there, is there, you know, this is a quite large, um, obviously kind of persistent discount. How many of the is there any? Anything else kind of um under consideration or that has come across your desk?
Speaker #2: As opposed to something further
Speaker #2: out.
Speaker #5: Okay. That
Michael Lewis: Okay. That makes sense. And then my second question, you talked about all the things you're kind of exploring, right? So the stock price is below $3. I think consensus NAV is $8. So some of those things could be share buybacks if you get the leverage down. Has the board talked at all or thought about any kind of a recap? Or is there M&A interest out there? Because this is a quite large, obviously, kind of persistent discount to NAV. Is there anything else kind of under consideration or that has come across your desk?
Michael Lewis: Okay. That makes sense. And then my second question, you talked about all the things you're kind of exploring, right? So the stock price is below $3. I think consensus NAV is $8. So some of those things could be share buybacks if you get the leverage down. Has the board talked at all or thought about any kind of a recap? Or is there M&A interest out there? Because this is a quite large, obviously, kind of persistent discount to NAV. Is there anything else kind of under consideration or that has come across your desk?
Speaker #5: makes sense. And then my second question, you talked about all the things you're kind of exploring, right? So the stock price is below $3.
Speaker #5: consensus anyway is I think $8. So some of those things could be share buybacks if you get the leverage down. Has the board talked at all or thought about any kind of a recap or is there M&A interest out there?
Speaker #5: Is there—because this is quite a large, obviously kind of persistent discount to any of these—is there anything else kind of under consideration, or that has come across your desk?
Speaker #3: Yeah. Look, I mean, the board and management always have an open door to any type of strategic solution. I think we evaluate where we are today and where we want to go.
Gerard H. Sweeney: Yeah. Look, I mean, the board and management always have open door to any type of strategic solution, I think, as we evaluate where we are today and where we want to go. We do believe that one of the drivers of the discount in our public market pricing is the leasing up of these development projects and the related impact on our balance sheet metrics. But I think when we take a harder look at the overall strategic direction, the operating portfolio remains in excellent shape. We're growing occupancy with positive absorption, with good capital control. In several of our markets, we're getting the highest net effective rents we've ever gotten. We are absorbing more than our market share. Bought 3025, a great asset onto our balance sheet. Tour volume, all those things are resonating that there's a very good pathway to NOI growth.
Gerard H. Sweeney: Yeah. Look, I mean, the board and management always have open door to any type of strategic solution, I think, as we evaluate where we are today and where we want to go. We do believe that one of the drivers of the discount in our public market pricing is the leasing up of these development projects and the related impact on our balance sheet metrics. But I think when we take a harder look at the overall strategic direction, the operating portfolio remains in excellent shape. We're growing occupancy with positive absorption, with good capital control. In several of our markets, we're getting the highest net effective rents we've ever gotten. We are absorbing more than our market share. Bought 3025, a great asset onto our balance sheet. Tour volume, all those things are resonating that there's a very good pathway to NOI growth.
Speaker #3: We do believe that one of the drivers of the discount in our public market pricing is the leasing up of these development projects and the related impact on our balance sheet metrics.
Yeah, look. I mean, the the, the the board and management always always have open open door to any type of strategic solution. I think is, uh, we evaluate where we are today, and where we want to go, we, we do believe that the, uh, you know, 1 of the drivers of the discount in our public market pricing, uh, is, uh, is the uh, uh, leasing up of these development projects and the related impact of, uh, uh, on on our balance sheet metrics. But, you know, I think when we take a a harder look at the overall strategic Direction, uh, you know, the the the, the, the operating portfolio remains an excellent shape. We're growing occupancy with positive, absorption with good Capital control. Uh, you know in several of our markets, we're getting, you know, the highest net effective rents we've ever gotten. Uh, we are absorbing more than our market share above 3025. A great asset onto our balance sheet.
Speaker #3: But I think when we take a harder look at the overall strategic direction, the operating portfolio remains in excellent shape. We're growing occupancy with positive absorption with good capital getting the highest net effective rents we've ever control.
Uh tour volume. All those things are resonating that you know there's a very good Pathway to noi growth. So the I think the foundational points of the operating portfolio are in very, very strong shapes. We do believe, we have an opportunity to both improve the overall quality of the portfolio, simplify our Holdings, uh, and deliver by bringing on, uh, uh, this 290 million to the midpoint of sales and that's across the across all of our different markets,
uh,
Speaker #3: gotten. We are absorbing more than our market share. In several of our markets, we're But 3025, great asset onto our balance sheet. Tour volume, all those things are resonating that there's a very good pathway to NOI growth.
Speaker #3: So I think the foundational points of the operating portfolio are in very, very strong shape. We do believe we have an opportunity to both improve the overall quality of the portfolio, simplify our holdings, and deliver by bringing on this $290 million to the midpoint of sales.
Gerard H. Sweeney: So I think the foundational points of the operating portfolio are in very, very strong shapes. We do believe we have an opportunity to both improve the overall quality of the portfolio, simplify our holdings, and de-lever by bringing on this $290 million to the midpoint of sales. And that's across all of our different markets. And I think when we take a look at the challenges we have underway, I mean, certainly, there's Austin, as I mentioned, has been a 400 basis point hit to our occupancy. Certainly, that portfolio has underperformed our expectations. We've sold a number of assets down there, as I mentioned to a previous question. Our focus really is gearing in sharply on the value we can create at our Uptown ATX development.
Gerard H. Sweeney: So I think the foundational points of the operating portfolio are in very, very strong shapes. We do believe we have an opportunity to both improve the overall quality of the portfolio, simplify our holdings, and de-lever by bringing on this $290 million to the midpoint of sales. And that's across all of our different markets. And I think when we take a look at the challenges we have underway, I mean, certainly, there's Austin, as I mentioned, has been a 400 basis point hit to our occupancy. Certainly, that portfolio has underperformed our expectations. We've sold a number of assets down there, as I mentioned to a previous question. Our focus really is gearing in sharply on the value we can create at our Uptown ATX development.
Speaker #3: And that's across all of our different markets. And I think when we take a look at the challenges we have underway, I mean, certainly there's Austin, as I mentioned, has been a foreigner basis point hit to our occupancy.
Speaker #3: We've certainly seen that portfolio has underperformed our expectations. We've sold a number of assets down there. As I mentioned to a previous question, our focus really is gearing in sharply on the value we can create at our Uptown ATX development.
and I think, uh, you know, we take a look at the challenges we have underway. I mean, certainly there there's uh, uh, you know, Austin, as I mentioned, has been a foreigner basis point, hit to our occupancy. We've, you know, we've certainly that portfolio is underperformed, our expectations. We've sold the number of assets down there. Uh, as I mentioned, uh, to a previous uh, question, you know our Focus really is is is gearing in sharply on the value. We can create uh at uh at our at our Uptown ATX development. Uh, but we also recognize that there's an overhang right now on our 2 remaining developments primarily 1 Uptown, which now is, you know, as mentioned at 65% and then 3151, you know, I mean we have a great pipeline there but we need to show the street that we can execute and get leasing done there. Uh we did take at a higher price cost of capital uh albeit uh uh through a loan proceeds, uh but we do have, you know uh half a million half a billion dollars of of of
Speaker #3: But we also recognize that there's an overhang right now on our two remaining developments, primarily one uptown, which now, as I mentioned, is 65%.
Gerard H. Sweeney: But we also recognize that there's an overhang right now on our two remaining developments, primarily One Uptown, which now is, as you mentioned, at 65%, and then 3151. I mean, we have a great pipeline there. But we need to show the street that we can execute and get leasing done there. We did take out a higher price cost of capital, albeit through loan proceeds. But we do have half a billion dollars of assets on the balance sheet that aren't generating a lot of return right now. And we think as that leases up, we'll be in great shape. All that being said, the board and management review our strategic direction every quarter. We remain in very close touch. We have a lot of discussions underway with these recap partners, asset sale programs.
Gerard H. Sweeney: But we also recognize that there's an overhang right now on our two remaining developments, primarily One Uptown, which now is, as you mentioned, at 65%, and then 3151. I mean, we have a great pipeline there. But we need to show the street that we can execute and get leasing done there. We did take out a higher price cost of capital, albeit through loan proceeds. But we do have half a billion dollars of assets on the balance sheet that aren't generating a lot of return right now. And we think as that leases up, we'll be in great shape. All that being said, the board and management review our strategic direction every quarter. We remain in very close touch. We have a lot of discussions underway with these recap partners, asset sale programs.
Speaker #3: And then 3151. I mean, we have a great pipeline there, but we need to show the Street that we can execute and get leasing done there.
Speaker #3: We did take at a higher price cost of capital albeit through a loan proceeds. But we do have half a million, half a billion dollars of assets on the balance sheet that aren't generating a lot of return right now.
Assets on the balance sheet that aren't generating a lot of return right now, and we think as that leases up will be in great shape. All that being said, uh, you know, the, the board, uh, and managed to review our strategic Direction. Every quarter we remain in very close touch, uh, we have a lot of discussions underway with, uh, these recap Partners asset sale programs. So, uh, I I think we never lose sight of the fact that, uh, you know, tactics have to be part.
Speaker #3: And we think as that lease is up, we'll be in great shape. All that being said, the board and management review our strategic direction every quarter.
Part of a strategic direction. We think of all the key ingredients here to get back to investment grade, metrics stabilize these development projects all while we're recycling assets to generate additional liquidity, but also maintaining good operating portfolio uh performance.
Okay, thank you.
Speaker #3: We remain in very close touch. We have a lot of discussions underway with these recap partners and the asset sale program. So I think we never lose sight of the fact that tactics have to be part of a strategic direction.
For any further, remarks.
Gerard H. Sweeney: So I think we never lose sight of the fact that tactics have to be part of a strategic direction. We think of all the key ingredients here to get back to investment-grade metrics, stabilize these development projects, all while we're recycling assets to generate additional liquidity, but also maintaining good operating portfolio performance.
Gerard H. Sweeney: So I think we never lose sight of the fact that tactics have to be part of a strategic direction. We think of all the key ingredients here to get back to investment-grade metrics, stabilize these development projects, all while we're recycling assets to generate additional liquidity, but also maintaining good operating portfolio performance.
Speaker #3: We think of all the key ingredients here to get back to investment-grade metrics, stabilize these development projects, all while we're recycling assets to generate additional liquidity, but also maintaining good operating portfolio performance.
Uh great. Well thank you all for participating in our in our call today, look prior to signing off. You know, sometime ago we did announce that George Johnstone has elected to retire, so this will be, he'll be retiring shortly. This will be his last earnings call. So uh,
Speaker #5: Okay. Thank
Michael Lewis: Thank you.
Michael Lewis: Thank you.
Speaker #5: you. Thank you.
Operator: 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.
Operator: 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.
Speaker #1: 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.
Speaker #3: Great. Well, thank you all for participating in our call today. Look, prior to signing off, some time ago, we did announce that George Johnstone has elected to retire.
Gerard H. Sweeney: Great. Well, thank you all for participating in our call today. Look, prior to signing off, some time ago, we did announce that George Johnstone has elected to retire. So he'll be retiring shortly. This will be his last earnings call. So while we have several internal celebrations planned for his remarkable career, I did just want to mention on the call, on behalf of the board and the employees, George, thank you for your many years of outstanding service and your many, many contributions. You will be missed. But we have very best wishes for the next step of your life's journey. So with that, Jonathan, we can sign off.
Gerard H. Sweeney: Great. Well, thank you all for participating in our call today. Look, prior to signing off, some time ago, we did announce that George Johnstone has elected to retire. So he'll be retiring shortly. This will be his last earnings call. So while we have several internal celebrations planned for his remarkable career, I did just want to mention on the call, on behalf of the board and the employees, George, thank you for your many years of outstanding service and your many, many contributions. You will be missed. But we have very best wishes for the next step of your life's journey. So with that, Jonathan, we can sign off.
The what we have several internal uh celebrations plans to to for his remarkable career. I did just want to mention on the call on behalf of the board of the employees. Uh this is George. Thank you for your many years of of outstanding service and your many, many contributions we you will be missed. Uh but we have very best wishes for the next step of your life's journey. So uh with that uh Jonathan we can sign off.
Speaker #3: So this will be he'll be retiring shortly. This will be his last earnings call. So while we have several internal celebrations planned for his remarkable career, I did just want to mention on the call, on behalf of the board of the employees, George, thank you for your many years of outstanding service and your many, many contributions.
Certainly, thank you. Ladies and gentlemen for your participation. In today's conference, this does include the program. You may now disconnect good day.
Speaker #3: You will be missed. But we have very best wishes for the next step of your life's journey. So with that, Jonathan, we can sign off.
Speaker #1: Certainly. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good
Operator: Certainly. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Operator: Certainly. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
