Brandywine is an active developer in the Philadelphia and Austin markets, which it focuses on due to their attractive characteristics. Austin has enjoyed fast-paced job growth, driving steady rent growth and development opportunities. Meanwhile, Philadelphia is becoming a major hub for the fast-growing life science sector.
Its largest Austin development is Broadmoor, a 66-acre mixed-use community home to IBM. Its current development plan includes 2 million square feet of commercial space (office, hotel, and retail) and 1,250 multifamily units built around the existing buildings.
In Philadelphia, it's the master developer of Schuylkill Yards, a multiphase 14-acre, 5.1 million-square-foot development of life science, research and academic, office, residential, retail, and hospitality spaces.
Brandywine Realty Trust news
Brandywine Realty fared reasonably well during 2020 despite the pandemic's impact on some of its tenants. The REIT's FFO slipped slightly from $1.43 per share in 2019 to $1.39 per share in 2020 due to lower occupancy and the writeoff of some rent.
However, leasing activity picked up toward the end of the year, enabling the company to sign more than 372,000 square feet of new and renewal leases at rates 18.9% above in-place rents. That helped nudge its core portfolio's occupancy level from 91.9% to 93% once all the new leases commence.
The REIT completed several transactions during the year to strengthen its balance sheet and enhance its growth prospects. It sold a portfolio of 12 suburban office properties to a joint venture for $192.9 million in December. Nine of the properties are in Pennsylvania, and the other three are in Maryland. It will retain a 20% interest in this Mid-Atlantic Office Joint Venture and provide management, leasing, and construction management services. The company also completed a $600 million joint venture for One and Two Commerce Square in Philadelphia, selling a 30% preferred interest in the twin office towers.
Brandywine also purchased two office buildings during the fourth quarter of 2020, both in Pennsylvania, for a combined $30 million. One has minimal occupancy, and the company plans to begin redeveloping it this year. The other is 100% occupied by a single tenant, which the company will redevelop once they vacate the building. The REIT also invested $50 million of preferred equity into two office properties in Austin.
Brandywine signed another joint venture in early 2021. This one was with a global institutional investor to help develop its planned 570,000-square-foot mixed-use tower within its $3.5 billion Schuylkill Yards development in Philadelphia. This investment will help finance construction on the $287 million tower project. It will deliver 326 ultra-luxury rental residences, 200,000 square feet of life science/innovation office space, 29,000 square feet of indoor/outdoor amenity space, and 9,000 square feet of retail to the neighborhood.
Brandywine Realty Trust stock price
Brandywine's development strategy focused on Philadelphia and Austin hasn't created much value for investors in recent years: