PHILADELPHIA, PA — Brandywine Realty Trust (NYSE: BDN) reported a net loss of $89 million for the second quarter of 2025, or $0.51 per diluted share, as it absorbed $63.4 million in non-cash impairment charges tied to its Austin, Texas portfolio. The results mark a sharp reversal from the same quarter last year, when the company posted net income of $29.9 million.
Despite the impairment, the office REIT reported signs of operating strength, including a 35% quarter-over-quarter rise in leasing activity, continued progress on its development pipeline, and a fully drawn speculative revenue target for the year. The company signed 234,000 square feet of leases in its wholly owned portfolio during the second quarter, with total leasing—including joint ventures—reaching 461,000 square feet.
“We are pleased with progress on our 2025 business plan highlighted by achieving over 98% of our speculative revenue target at the midpoint of our current guidance,” said President and CEO Gerard H. Sweeney. He noted improved tenant demand, a 66% increase in company-wide tour activity, and strong progress on leasing for the firm’s development projects, including a 100,000 square foot lease at One Uptown and an 89% leasing rate at the Solaris residential project in Austin.
FFO Down, Guidance Trimmed
Funds from operations (FFO), a key performance measure for REITs, totaled $26.1 million, or $0.15 per diluted share, down from $38 million, or $0.22 per share, a year ago. The firm revised full-year FFO guidance to a range of $0.60 to $0.66 per share, trimming the midpoint slightly from its previous range but keeping it above consensus expectations.
Brandywine also lowered its earnings guidance, adjusting projected 2025 net loss per share to between $(0.96) and $(0.90), citing uncertainty in land sales and the timing of transaction closings.
Core Operations and Leasing Performance
The REIT’s core portfolio was 88.6% occupied and 91.1% leased as of July 18, up from 88.5% occupancy at the end of June. Same-store net operating income rose 6.3% on a cash basis and 1.0% on an accrual basis. The tenant retention ratio hit 82%, and the company reported a 2.1% rental rate increase on an accrual basis, although cash rent fell 4.7%.
Notably, the company has just 5.1% average annual lease expirations through 2026—a comparatively low risk in a volatile office market.
Asset Sales and Financing Activity
Brandywine completed the $17.6 million sale of an underperforming Austin office property in June and expects to close another $55.1 million transaction in the city, raising its 2025 asset sale target to $72.7 million. Both properties had low occupancy rates.
In June, the company raised $150 million through a bond issuance due in 2029, with net proceeds used to pay down its unsecured credit line and retire a $43.6 million construction loan in July. As of June 30, Brandywine had no outstanding balance on its $600 million unsecured line and held $123 million in cash.
Dividend and Capital Plan
Brandywine maintained its quarterly dividend at $0.15 per share, paid in July. The REIT did not repurchase any shares during the quarter and reported a 100% payout ratio based on Q2 FFO.
Outlook
Management expressed confidence in its liquidity position and development leasing prospects but acknowledged ongoing market uncertainty. The company removed land sale gains from its guidance due to timing issues and noted the risk of additional impairments or transaction-related adjustments.
While impairments in the Austin market dragged down headline results, Brandywine’s core operations remain resilient, with progress in leasing and development pointing to improving fundamentals in an otherwise cautious office sector.
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