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What changed in BRANDYWINE REALTY TRUST's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BRANDYWINE REALTY TRUST's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+203 added−172 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-22)

Top changes in BRANDYWINE REALTY TRUST's 2024 10-K

203 paragraphs added · 172 removed · 146 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

21 edited+6 added−5 removed36 unchanged
Biggest changeFor additional information, see Item 1A. Risk Factors – Regulatory Risk Factors – Potential liability for environmental contamination could result in substantial costs. Information Security We face risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems.
Biggest changeRisk Factors.” Information Security We face risks associated with breaches of our information technology systems, including through cyber attacks and cyber intrusions, which could result in significant disruptions of our information technology networks and related systems and unauthorized access to our information and information of our tenants and personnel.
We also consider the following to be important objectives: • to own and develop high-quality office, life science/lab, residential, and mixed-use properties meeting the demands of today’s tenants who require sophisticated telecommunications and related infrastructure, support services, sustainable features and amenities, and to manage those facilities so as to continue to be the landlord of choice for both existing and prospective tenants; • to capitalize on our redevelopment expertise to selectively develop, redevelop and reposition properties in desirable locations that other organizations may not have the resources to pursue; • to opportunistically acquire high-quality office, life science/lab, residential, and mixed-use properties at attractive yields in markets that we expect will experience economic growth and where we can achieve operating efficiencies; • to monetize or deploy our land inventory for development of high-quality office, life science/lab, residential, and mixed-use properties, or rezone from office/industrial to life science/lab, residential, retail and hotel to align with market and demand shifts as appropriate; • to control development sites, including sites under purchase options, that could support high-quality office, life science/lab, residential, and mixed-use properties within our core markets; • to strategically grow our portfolio through the development and acquisition of new product types that support our strategy of transit-oriented and amenity based mixed-use properties located in the central business district of Philadelphia, Pennsylvania; Pennsylvania Suburbs; and Austin, Texas; and • to secure third-party development contracts, which can be a significant source of revenue and enable us to utilize and grow our existing development and construction management resources.
We also consider the following to be important objectives: • to own and develop high-quality office, life science/lab, residential, and mixed-use properties meeting the demands of today’s tenants who require sophisticated telecommunications and related infrastructure, support services, sustainable features and amenities, and to manage those facilities so as to continue to be the landlord of choice for both existing and prospective tenants; • to capitalize on our redevelopment expertise to selectively develop, redevelop and reposition properties in desirable locations that other organizations may not have the resources to pursue; • to opportunistically acquire high-quality office, life science/lab, residential, and mixed-use properties at attractive yields in markets that we expect will experience economic growth and where we can achieve operating efficiencies; • to monetize or deploy our land inventory for development of high-quality office, life science/lab, residential, and mixed-use properties, or to rezone our land and properties from office/industrial to life science/lab, residential, retail and hotel to align with market and demand shifts as appropriate; • to control development/redevelopment sites, including sites under purchase options, that could support high-quality office, life science/lab, residential, and mixed-use properties within our core markets; • to strategically grow our portfolio through the development/redevelopment and acquisition of new product types that support our strategy of transit-oriented and amenity based mixed-use properties located in the central business district of Philadelphia, Pennsylvania; Pennsylvania Suburbs; and Austin, Texas; and • to secure third-party development/redevelopment contracts, which can be a significant source of revenue and enable us to utilize and grow our existing development/redevelopment and construction management resources.
To accomplish this objective we seek to: • concentrate on urban town centers and central business districts in selected regions, and be the best of class owner and developer in those markets with a full-service office in each of those markets providing property management, leasing, development, and construction expertise; • maximize cash flow through leasing strategies designed to capture rental growth as rental rates increase and as leases are renewed; • attain high tenant retention rates by providing a full array of property management, maintenance services and tenant service amenity programs responsive to the varying needs of our diverse tenant base; • cultivate long-term leasing relationships with a diverse base of high-quality and financially stable tenants; • increase the economic diversification of our tenant base while maximizing economies of scale; • form joint ventures with high-quality partners having attractive real estate holdings or significant financial resources; • utilize our reputation as a full-service real estate development and management organization to identify acquisition and development opportunities that will expand our business and create long-term value; and • selectively dispose of properties that do not support our long-term business objectives and growth strategies.
To accomplish this objective we seek to: • concentrate on urban town centers and central business districts in selected regions, and be the best of class owner and developer in those markets with a full-service office in each of those markets providing property management, leasing, development/redevelopment, and construction expertise; • maximize cash flow through leasing strategies designed to capture rental growth as rental rates increase and as leases are renewed; • attain high tenant retention rates by providing a full array of property management, maintenance services and tenant service amenity programs responsive to the varying needs of our diverse tenant base; • cultivate long-term leasing relationships with a diverse base of high-quality and financially stable tenants; • increase the economic diversification of our tenant base while maximizing economies of scale; • form joint ventures with high-quality partners having attractive real estate holdings or significant financial resources; • utilize our reputation as a full-service real estate development/redevelopment and management organization to identify acquisition and development/redevelopment opportunities that will expand our business and create long-term value; and • selectively dispose of properties that do not support our long-term business objectives and growth strategies.
In addition to our four geographic markets, our corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions. See Note 1 “Organization of the Parent Company and the Operating Partnership,” to our Consolidated Financial Statements for our property portfolio, management services and land holdings.
In addition to our four geographic markets, our corporate group is responsible for cash and investment management, development/redevelopment of certain real estate properties during the construction period, and certain other general support functions. See Note 1 “Organization of the Parent Company and the Operating Partnership,” to our Consolidated Financial Statements for our property portfolio, management services and land holdings.
Operational Strategy We currently expect to continue to operate in markets where we have a concentration advantage due to economies of scale. We believe that where possible, it is best to operate with a strong base of properties in order to benefit from the personnel allocation and the market strength associated with managing multiple properties in the same market.
Operational Strategy We currently expect to continue to operate in markets where we have a concentration advantage due to economies of scale. We believe that where possible, it is best to operate with a strong base of properties in order to benefit from the personnel 7 allocation and the market strength associated with managing multiple properties in the same market.
For information regarding our joint ventures, see Note 4 “Investment in Unconsolidated Real Estate Ventures,” to our Consolidated Financial Statements. 6 Developments/Redevelopments Our regular interaction with tenants and other market participants keep us current on innovations in workplace layout and smart living.
For information regarding our joint ventures, see Note 4 “Investment in Unconsolidated Real Estate Ventures,” to our Consolidated Financial Statements. 6 Developments/Redevelopments Our regular interaction with tenants and other market participants help to keep us current on innovations in workplace layout and smart living.
In the long term, we believe that we are well positioned in our current markets and have the expertise to take advantage of both development and acquisition opportunities, as warranted by market and economic conditions, in new markets that have healthy long-term fundamentals and strong growth projections.
We believe that we are well positioned in our current markets and have the expertise to take advantage of both development/redevelopment and acquisition opportunities, as warranted by market and economic conditions, in new markets that have healthy long-term fundamentals and strong growth projections.
We also intend to 7 selectively dispose of properties and redeploy capital if we determine a property cannot meet our long-term earnings growth expectations. We believe that recycling capital is an important aspect of maintaining the overall quality of our portfolio.
We also intend to selectively dispose of properties and redeploy capital if we determine a property cannot meet our long-term earnings growth expectations. We believe that recycling capital is an important aspect of maintaining the overall quality of our portfolio.
We seek to maintain a challenging, enriching, respectful, diverse, inclusive, collaborative and rewarding work environment for our employees whom we consider to be among our most valuable assets.
We seek to maintain a challenging, enriching, respectful, diverse, inclusive, collaborative and rewarding work environment for 9 our employees whom we consider to be among our most valuable assets.
During the twelve months ended December 31, 2023, we owned and managed properties within four markets: (1) Philadelphia Central Business District (“Philadelphia CBD”), (2) Pennsylvania Suburbs, (3) Austin, Texas, and (4) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia in Pennsylvania.
During the twelve months ended December 31, 2024, we owned and managed properties within four markets: (1) Philadelphia Central Business District (“Philadelphia CBD”), (2) Pennsylvania Suburbs, (3) Austin, Texas, and (4) Other. The Philadelphia CBD segment includes properties located in the City of Philadelphia, Pennsylvania.
Our broader strategy remains focused on continuing to grow earnings, enhance liquidity and strengthen our balance sheet through capital retention, debt reduction, targeted sales activity and management of our existing and prospective liabilities.
Our broader strategy remains focused on continuing to grow earnings, enhance liquidity and strengthen our balance sheet through debt reduction, targeted sales activity and management of our existing and prospective liabilities.
Business Segments See Note 19 “Segment Information , ” to our Consolidated Financial Statements for information on results of operations of our reportable segments for the years ended December 31, 2023, 2022, and 2021 and balance sheet amounts as of December 31, 2023 and 2022.
Business Segments See Note 18 “Segment Information , ” to our Consolidated Financial Statements for information on results of operations of our reportable segments for the years ended December 31, 2024, 2023, and 2022 and balance sheet amounts as of December 31, 2024 and 2023.
This capability, combined with what we believe is a conservative financial structure, should allow us to achieve disciplined growth. These abilities are integral to our strategy of having a diverse portfolio of assets, which will meet the needs of our tenants.
This capability, combined with what we believe is a conservative financial structure, should allow us to achieve disciplined growth and are integral to our strategy of having a diverse portfolio of assets in order to meet the needs of our tenants.
We have implemented a training program for employees that includes both proactive education modules, as well as reactive anti-phishing and testing modules designed to test the end-user’s ability to put what they have learned into practice. Human Capital Resources As of December 31, 2023, we had approximately 323 full-time employees and eight part-time employees and two interns.
We have implemented a training program for employees that includes both proactive education modules, as well as reactive anti-phishing and testing modules designed to test the end-user’s ability to put what they have learned into practice. Human Capital Resources As of December 31, 2024, we had approximately 285 full-time employees and five part-time employees and one intern.
We promote diversity, equity, and inclusion through board diversity and employee engagement. Employees are given access to mentorship and tuition reimbursement opportunities as well as numerous programs to promote health and wellness.
We remain committed to supporting our employees and the communities where we operate. We promote diversity, equity, and inclusion through board diversity and employee engagement. Employees are given access to mentorship and tuition reimbursement opportunities as well as numerous programs to promote health and wellness.
We maintain policies and programs that we believe reflect our continued commitment to our employees, including: • a competitive compensation program and benefits package; • operational protocols which prioritize employee health, safety and well-being; • promotion of diversity and inclusion in our hiring practices; ◦ In 2023, approximately 43% of all new hires were females and approximately 30% of all new hires were ethnic minorities. • training and career development opportunities and a tuition reimbursement program; and • regular assessment of the engagement, satisfaction and retention of our employees. 9 Environmental, Social, and Corporate Governance Brandywine is committed to implementing and maintaining environmental, social, and governance (“ESG”) standards while driving value through continual improvement of our operations, portfolio performance, and community impact.
We maintain policies and programs that we believe reflect our continued commitment to our employees, including: • a competitive compensation program and benefits package; • operational protocols which prioritize employee health, safety and well-being; • promotion of diversity and inclusion in our hiring practices; ◦ In 2024, approximately 46% of all new hires were females and approximately 46% of all new hires were ethnic minorities. • training and career development opportunities and a tuition reimbursement program; and • regular assessment of the engagement, satisfaction and retention of our employees.
The Audit Committee of our Board (the “Audit Committee”) and senior management receive and review periodic reports on cybersecurity matters from our Chief Technology and Innovation Officer, including reports on documented incidents or violations of our IT and security policies.
As part of our remediation activities, we strengthened our surveillance of cybersecurity threats and our information backup systems. The Audit Committee of our Board (the “Audit Committee”) receives and reviews periodic reports on cybersecurity matters from our Chief Technology and Innovation Officer, including reports on documented incidents or violations of our IT and security policies.
Documented incidents or violations are discussed, and managers are notified for the appropriate follow-up with our human resources department or the employees involved in such incidents or violations, as needed.
Documented incidents or violations are discussed, and managers are notified for the appropriate follow-up with our human resources department or the employees involved in such incidents or violations, as needed. Our Board and the Audit Committee regularly evaluate our information technology and security policies and controls to address new and novel threats to our systems.
We achieved 2022 Green Lease Leaders Platinum recognition in the category’s inaugural year, recognizing our collaboration with tenants to equitably align financial and environmental benefits. We were also recognized for our commitment to the Philadelphia 2030 District initiative to achieve substantial reduction in energy use by the year 2030.
In 2024, we received our tenth annual Global Real Estate Sustainability Benchmark (“GRESB”) Green Star ranking. We achieved Green Lease Leaders Platinum recognition in the category’s inaugural year, recognizing our collaboration with tenants to equitably align financial and environmental benefits. We remain committed to energy efficiency in our buildings.
Brandywine maintains and encourages the use of over 74 acres of public green space for community engagement including a focus on biodiversity through our onsite, honey generating, beekeeping habitats. We continue to foster long-standing, ethical partnerships with local suppliers and drive economic resilience through the Schuylkill Yards projects and community totaling $16.4 million to date.
Brandywine maintains and encourages the use of over 74 acres of green space for community engagement including a focus on biodiversity through our onsite, honey generating, beekeeping habitats. For further information regarding our environmental, social, and governance strategies and policies, please visit the “Responsibility” section of our website.
Our reduction targets for energy, greenhouse gas emissions and water are focused to reduce consumption 15% compared to our 2018 baseline by 2025. We have reached a 25% like-for-like intensity use reduction from baseline for water and energy, as well as a 23.9% like-for-like intensity use reduction from baseline for greenhouse gas emissions.
We have reached the following levels as of December 31, 2024: a 35% like-for-like intensity use reduction from baseline for energy, a 29% like-for-like intensity use reduction from baseline for water and a 43% like-for-like intensity use reduction from baseline for greenhouse gas emissions, thus achieving our reduction targets a year early.
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Although we have not experienced a data or other cybersecurity breach in the past three years that resulted in a financial loss, our Board and the Audit Committee regularly evaluate our existing information technology and security policies and controls to address new and novel threats posed to the Company.
Added
For additional information, see Item 1A. “Risk Factors – Regulatory Risk Factors – Potential liability for environmental contamination could result in substantial costs.” Insurance With respect to our properties, we carry commercial general liability insurance, and all-risk property insurance, including business interruption and loss of rental income coverage.
Removed
In 2023, we extended our industry-leading ISS Governance Quality Score of 1, representing the highest possible score and indicating the lowest shareholder risk and received our eighth annual Global Real Estate Sustainability Benchmark (“GRESB”) Green Star ranking, and our second 5-Star ranking.
Added
We select policy specifications and insured limits that we believe to be appropriate given the relative risk of loss and the cost of the coverage. We also carry environmental insurance and title insurance policies on our properties.
Removed
We have further completed an additional 1.8 million square feet of green certifications for our buildings raising the total to 15.3 million square feet of green building certifications, encompassing approximately 54% of our portfolio. We remain committed to energy efficiency in our buildings.
Added
We generally obtain title insurance policies when we acquire a property, with each policy covering an amount equal to the initial purchase price of each property. Accordingly, any of our title insurance policies may be in an amount less than the current value of the related property.
Removed
We’ve achieved Energy Star certification across the majority of our portfolio and participate in the UL Verified Healthy Buildings Program. Over 650 energy, water, and waste efficiency projects were implemented in our portfolio, and we continue to generate and procure renewable energy for our properties. Brandywine remains committed to supporting our employees and the communities where we operate .
Added
Additional information about risk factors that may affect us is included in “Item 1A.
Removed
We’ve spearheaded new, equitable transit-oriented development in Austin and Philadelphia and continue to assess what investments will impact our employees and communities in the most impactful ways. For further information regarding our environmental, social, and governance strategies and policies, please visit the “Responsibility” section of our website.
Added
As we previously disclosed, in April 2024, we detected unauthorized occurrences by a third party on portions of our information technology systems. Upon detecting the unauthorized occurrences, we promptly initiated our previously established response protocols and took steps to contain and remediate the incident.
Added
Environmental, Social, and Corporate Governance We are committed to to implementing and maintaining environmental, social, and governance (“ESG”) standards while driving value through continual improvement of our operations, portfolio performance, and community impact. Our reduction targets for energy, greenhouse gas emissions and water aim to reduce consumption by 15% compared to our 2018 baseline by 2025.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

20 edited+9 added−1 removed194 unchanged
Biggest changeData and security breaches could: • disrupt the proper functioning of our networks and systems and therefore our operations and/or those of our client tenants; • result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines; • result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; • result in the unauthorized access to, and destruction, loss, theft, misappropriation, or release of proprietary, confidential, sensitive, or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive, or otherwise harmful purposes and outcomes; • result in our inability to maintain the building systems relied upon by our client tenants for the efficient use of their leased space; • require significant management attention and resources to remedy any damages that result; • subject us to claims and lawsuits for breach of contract, damages, credits, penalties, or termination of leases or other agreements; and/or • damage our reputation among our client tenants and investors generally.
Biggest changeData security breaches, including the one noted above, have in the past, and may in the future, result in one or more of the following harms: • disrupt the proper functioning of our networks and systems and therefore our operations and/or those of our tenants; • result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines; • result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; • result in the unauthorized access to, and destruction, loss, theft, misappropriation, or release of proprietary, confidential, sensitive, or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive, or otherwise harmful purposes and outcomes; • require significant management attention and resources to remedy any damages that result; • subject us to claims and lawsuits for breach of contract, damages, credits, penalties, or other agreements; and/or • damage our reputation among our tenants and investors generally.
In addition, an increase in interest rates could decrease 21 the amounts third parties are willing or able to pay for our assets, thereby limiting our ability to recycle capital and change our portfolio promptly in response to changes in economic or other conditions. For more information about our interest costs on variable rate debt see Part II, Item 7.
In addition, an increase in interest rates could decrease the 21 amounts third parties are willing or able to pay for our assets, thereby limiting our ability to recycle capital and change our portfolio promptly in response to changes in economic or other conditions. For more information about our interest costs on variable rate debt see Part II, Item 7.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures.
Accordingly, we may be unable to anticipate these techniques or implement adequate security barriers or other preventative measures.
Periodically, our tenants experience financial difficulties, including bankruptcy, insolvency or a general downturn in their business, and these difficulties may have an adverse effect on our cash flow, results of operations, financial condition and 11 ability to make distributions to our shareholders. We cannot assure you that any tenant that files for bankruptcy protection will continue to pay us rent.
Periodically, our tenants experience financial difficulties, including bankruptcy, insolvency or a general downturn in their business, and these difficulties may have an adverse effect on our cash flow, results of operations, financial condition and ability to make distributions to our shareholders. We cannot assure you that any tenant that files for bankruptcy protection will continue to pay us rent.
Certain of these contracts may be structured 12 such that we are the principal rather than the agent. As a result, we may assume liabilities in the course of the project and be subjected to, or become liable for, claims for construction defects, negligent performance of work or other similar actions by third parties we have engaged.
Certain of these contracts may be structured such that we are the principal rather than the agent. As a result, we may assume liabilities in the course of the project and be subjected to, or become liable for, claims for construction defects, negligent performance of work or other similar actions by third parties we have engaged.
There can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Protected information, networks, systems and facilities 22 remain vulnerable because the techniques used in such attempted security breaches evolve and may not be recognized or detected until launched against a target.
There can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Protected information, networks, systems and facilities remain vulnerable because the techniques used in such attempted security breaches evolve and may not be recognized or detected until launched against a target.
Such events could adversely affect our cash flow and ability to make distributions to shareholders. If one or more of our 23 insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations.
Such events could adversely affect our cash flow and ability to make distributions to shareholders. If one or more of our insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations.
In addition, our insurance policies may not recover all of our property replacement costs and lost revenue resulting from an attack. We might not be able to pass through the increased costs associated with such increased security measures and insurance to our tenants, which could reduce our profitability and cash flow.
In addition, our insurance policies may not recover all of our property replacement costs and lost revenue resulting from an attack. We might not be able to pass through the increased costs associated with such increased security measures and insurance to our tenants, 22 which could reduce our profitability and cash flow.
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors that May Influence Future Results of Operations - Development Risk.” Our development projects and third party property management business may subject us to certain liabilities.
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Factors that May Influence Future Results of Operations - Development Risk.” 12 Our development projects and third party property management business may subject us to certain liabilities.
Our credit facilities, term loans and the indenture governing our unsecured public debt securities contain (and any new or amended facility and term loans may contain) restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain.
Our credit facilities, term loans and the indentures governing our unsecured public debt securities contain (and any new or amended facility and term loans may contain) restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain.
During the year ended December 31, 2023, we recognized aggregate impairment charges of $168.8 million, with $131.6 million related to our Real Estate Investments and $37.2 million related to our Investment in Unconsolidated Real Estate Ventures. If we are required to take additional impairment charges, our results of operations could be adversely impacted.
During the year ended December 31, 2023, we recognized aggregate impairment charges of $168.8 million, $131.6 million of which related to our Real Estate Investments and $37.2 million of which related to our Investment in Unconsolidated Real Estate Ventures. If we are required to take additional impairment charges, our results of operations could be adversely impacted.
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates – Impairment.” See also Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Comparison of Year Ended December 31, 2023 to the Year Ended December 31, 2022 – Provision for Impairment.” We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of our tenants.
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates – Impairment.” See also Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Comparison of Year Ended December 31, 2024 to the Year Ended December 31, 2023 – Provision for Impairment.” 11 We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of our tenants.
We review and assess the cybersecurity controls of our third party service providers and vendors, as appropriate, and make changes to our business processes to manage these risks. Data breaches and/or the insolvency of such third parties and vendors may result in us incurring costs and may have other negative consequences.
We review and assess the cybersecurity controls of our third-party service providers and vendors, as appropriate, and make changes to our business processes to manage these risks. Data breaches and/or the insolvency of such third parties and vendors may result in us incurring costs and may have other negative consequences. Item 1B. Unresolved Staff Comments None.
Item 1A. Risk Factors You should carefully consider these risk factors, together with all of the other information included in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities. The risks set out below are not the only risks we face.
Item 1A. Risk Factors You should carefully consider these risk factors, together with all of the other information included in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities.
In the event that our unsecured debt is downgraded by Moody’s Investor Services or Standard & Poor’s from the current ratings, we would likely incur higher borrowing costs and the market prices of our common shares and debt securities might decline. Data security breaches may cause damage to our business and reputation.
In the event that our unsecured debt is downgraded by Moody’s Investor Services or Standard & Poor’s from the current ratings, we would likely incur higher borrowing costs and the market prices of our common shares and debt securities might decline.
An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets on favorable terms or at all. Rising interest rates could limit our ability to refinance existing debt when it matures or significantly increase our future interest expense.
Interest rates have increased and could continue to increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets on favorable terms or at all. Rising interest rates could continue to increase our interest expense and could limit our ability to refinance existing debt when it matures.
In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to earthquakes, terrorist acts and mold, flood, or, if offered, these types of insurance may be prohibitively expensive.
We cannot assure you that we will be able to renew insurance coverage in an adequate amount or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to earthquakes, terrorist acts and mold, flood, or, if offered, these types of insurance may be prohibitively expensive.
The risk of a security breach or disruption, mainly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased in number, intensity and sophistication. Notwithstanding the security measures undertaken, our information technology may be vulnerable to attacks or breaches resulting in proprietary information being publicly disclosed, lost or stolen.
Security 23 breaches or disruptions, mainly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, have generally increased in number, intensity and sophistication. Notwithstanding the security measures undertaken, our information technology has been, and may in the future be, vulnerable to attacks or breaches.
In the ordinary course of our business, we maintain sensitive data, including our proprietary business information and the information of our tenants and business partners, in our data centers and on our networks.
We have experienced, and may again experience, data security breach that may cause damage to our business and reputation. In the ordinary course of our business, we maintain sensitive data, including our proprietary financial information, business information and the information of our tenants and business partners, in our data centers and on our networks.
Some potential losses are not covered by insurance. We currently carry property insurance against all-risks of physical loss or damage (unless otherwise excluded in the policy) including time element and commercial general liability coverage on all of our properties.
We currently carry property insurance against all-risks of physical loss or damage (unless otherwise excluded in the policy) including time element and commercial general liability coverage on all of our properties. There are, however, types of losses, such as lease and other contract claims, biological, radiological and nuclear hazards and acts of war that generally are not insured.
Removed
There are, however, types of losses, such as lease and other contract claims, biological, radiological and nuclear hazards and acts of war that generally are not insured. We cannot assure you that we will be able to renew insurance coverage in an adequate amount or at reasonable prices.
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The Risk Factor Summary that follows should be read in conjunction with the detailed description of risk factors below. The risks set out below are not the only risks we face.
Added
During the year ended December 31, 2024, we recognized aggregate impairment charges of $53.1 million, $44.7 million of which related to our Real Estate Investments and $8.4 million of which related to our Investment in Unconsolidated Real Estate Ventures.
Added
Social, political and economic changes or instability, or other circumstances beyond our control could affect our business operations.
Added
Our business may be adversely affected by social, political and economic instability, unrest or disruption, including legal, regulatory and policy changes by a new presidential administration in the U.S., protests, demonstrations, strikes, riots, civil disturbance, disobedience, insurrection, or social and other political unrest.
Added
Such events may result in restrictions, curfews or other actions and give rise to significant changes in regional and global economic conditions and cycles, which may adversely affect our financial condition and operations.
Added
Changes in federal policy, including tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which can lead to changes involving the level of oversight and focus on certain industries and corporate entities.
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The nature, timing, and economic and political effects of potential changes to the current legal and regulatory frameworks affecting the real estate industry remain highly uncertain.
Added
Additionally, changes in federal policy that affect the geopolitical landscape, such as the imposition of tariffs and changes to U.S. trade policy, have, and could in the future, lead to adverse effects on the U.S. domestic economy and our business operations. Some potential losses are not covered by insurance.
Added
One such event occurred on May 1, 2024 when we detected unauthorized occurrences by a third party on portions of our information technology systems that consisted of the third party’s unauthorized access to, and deployment of encryption to, a portion of our internal corporate information technology systems and the exfiltration of certain files, including files containing personal information.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisks from Cybersecurity Threats We have not experienced a data or other cybersecurity breach in the past three years that have materially impaired our operations or resulted in a financial loss. 24 Governance and Oversight Management’s Role Managing Risk All Cybersecurity threats are reported to the Chief Technology and Innovation Officer (the “CTIO”), who promptly informs the General Counsel, Chief Financial Officer and other senior management officers of any cybersecurity incident or material cybersecurity threat.
Biggest changeGovernance and Oversight Management’s Role Managing Risk All Cybersecurity threats are reported to the Chief Technology and Innovation Officer (the “CTIO”), who promptly informs the General Counsel, Chief Financial Officer and other senior management officers of any cybersecurity incident or material cybersecurity threat.
The Audit Committee, comprised of board members with diverse experiences and expertise, is central to the Board’s oversight of management’s governance and management of cybersecurity risks and strategies. At least once each quarter, the CTIO provides reports to the Audit Committee, which include an update on cybersecurity practices and matters. Additionally, the CTIO provides comprehensive briefings to the Board annually.
The Audit Committee, comprised of board members with diverse experiences and expertise, is central to the Board’s oversight of management’s governance and management of cybersecurity risks and strategies. 25 At least once each quarter, the CTIO provides reports to the Audit Committee, which include reports on any documented incidents or violations of our IT and security policies and an update on cybersecurity practices and matters.
Our management team works closely with our IT department to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs. Our information security processes are designed to manage material risks from cybersecurity threats to our information systems and maintain the confidentiality, integrity and availability of our data.
Our management team works closely with our IT department to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.
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Our information security processes are designed to manage material risks from cybersecurity threats to our information systems and maintain the confidentiality, integrity and availability of our data. 24 We have also implemented a training program for employees that includes both proactive education modules, as well as reactive anti-phishing and testing modules designed to test the end-user’s ability to put what they learned into practice.
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Risks from Cybersecurity Threats We have not experienced a cybersecurity threat or cybersecurity incident in the past three years that has materially adversely affected our results of operations or financial condition.
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However, we face risks associated with breaches of our information technology systems, including through cyber-attacks and cyber intrusions, which could result in significant disruptions of our information technology systems (and those of third parties which we use), and unauthorized access to our information and information of our tenants and personnel.
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As we previously disclosed, on May 1, 2024, we detected unauthorized occurrences by a third party on portions of our information technology systems. Upon detecting the unauthorized occurrences, we promptly initiated our previously established response protocols and took steps to contain and remediate the incident.
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As part of our remediation activities, we strengthened our surveillance of cybersecurity threats and our information backup systems. A substantial portion of our direct costs incurred relating to containing, investigating and remediating the cybersecurity incident were reimbursed through insurance recoveries.
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As of the date of this Annual Report on Form 10-K, the cybersecurity incident has not had a material impact on our financial condition or results of operations, and we do not believe the cybersecurity incident is reasonably likely to materially impact our financial condition or results of operations. Refer to “Item 1A.
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Risk Factors” in this Form 10-K, including “We have experienced, and may again experience, data security breach that may cause damage to our business and reputation,” for additional discussion about cybersecurity-related risks.
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Documented incidents or violations are discussed, and managers are notified for the appropriate follow-up with our human resources department or the employees involved in such incidents or violations, as needed. Our Audit Committee regularly reviews with senior management our information technology and security policies and controls to address new and novel threats to our systems.
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Additionally, the CTIO provides comprehensive briefings to the Board annually.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFor more information about our geographic locations, see Note 19 “Segment Information” to our Consolidated Financial Statements: Location Number of Properties Net Rentable Square Feet (in thousands) Percentage Leased as of December 31, 2023 Leased Square Feet (in thousands) Total Base Rent (a) (in thousands) Percentage of Base Rent Philadelphia 11 4,726 96.9 % 4,579 $ 145,752 41.5 % Pennsylvania Suburbs 32 3,932 88.6 % 3,482 113,778 32.3 % Austin 18 2,576 82.6 % 2,128 60,260 17.1 % Other 8 1,464 81.1 % 1,187 31,941 9.1 % 69 12,698 89.6 % 11,376 $ 351,731 100.0 % (a) Represents base rents earned during the year, including tenant reimbursements, and excludes parking income, tenant inducements, and deferred market rent adjustments. 26 The following table shows the major tenants of the Core Properties as of December 31, 2023 and assumes that none of the tenants exercise renewal options or termination rights, if any, at or prior to scheduled expirations: Tenant Name Annualized Base Rents (a) (in thousands) Percentage of Aggregate Annualized Base Rents IBM, Inc. $ 20,849 4.7 % Spark Therapeutics, Inc. 18,527 4.2 % Comcast Corporation 12,309 2.8 % FMC Corporation 11,830 2.7 % Troutman Pepper Hamilton Sanders LLP 10,308 2.3 % Lincoln National Management Co. 9,935 2.2 % Independence Blue Cross, LLC 8,255 1.9 % The Trustees of the University of Pennsylvania 7,670 1.7 % CSL Behring, LLC 7,280 1.6 % SailPoint Technologies, Inc. 7,336 1.7 % Other 329,005 74.2 % $ 443,304 100.0 % (a) Represents the annualized base rent, including tenant reimbursements, for each lease in effect at December 31, 2023.
Biggest changeFor more information about our geographic locations, see Note 18 “Segment Information” to our Consolidated Financial Statements: Location Number of Properties Net Rentable Square Feet (in thousands) Percentage Leased as of December 31, 2024 Leased Square Feet (in thousands) Total Base Rent (a) (in thousands) Percentage of Base Rent Philadelphia 11 4,726 95.3 % 4,502 $ 145,621 43.4 % Pennsylvania Suburbs 28 3,555 90.4 % 3,215 105,824 31.6 % Austin 16 2,185 77.8 % 1,700 47,561 14.2 % Other 8 1,464 88.1 % 1,290 36,031 10.8 % 63 11,930 89.7 % 10,707 $ 335,037 100.0 % (a) Represents base rents earned during the year, including tenant reimbursements, and excludes parking income, tenant inducements, and deferred market rent adjustments. 28 The following table shows the major tenants of the Core Properties as of December 31, 2024 and assumes that none of the tenants exercise renewal options or termination rights, if any, at or prior to scheduled expirations: Tenant Name Annualized Base Rents (a) (in thousands) Percentage of Aggregate Annualized Base Rents IBM, Inc. $ 20,630 4.9 % Spark Therapeutics 18,711 4.4 % Comcast Corporation 12,462 3.0 % FMC Corporation 12,034 2.8 % Troutman Pepper Hamilton Sanders LLP 10,473 2.5 % Lincoln National Management Co. 10,372 2.5 % Independence Blue Cross LLC 8,782 2.1 % The Trustees of the University of Pennsylvania 7,811 1.8 % CSL Behrinig, LLC 7,605 1.8 % T-Mobile Northeast, LLC 7,380 1.7 % Other 305,923 72.5 % $ 422,183 100.0 % (a) Represents the annualized base rent, including tenant reimbursements, for each lease in effect at December 31, 2024.
Tenant reimbursements generally include payment of a portion of real estate taxes, operating expenses, and common area maintenance and utility charges. The following table shows the geographic locations for the Core Properties as of December 31, 2023.
Tenant reimbursements generally include payment of a portion of real estate taxes, operating expenses, and common area maintenance and utility charges. The following table shows the geographic locations for the Core Properties as of December 31, 2024.
Item 2. Properties Overview As of December 31, 2023, we owned 69 properties that contain an aggregate of approximately 12.7 million net rentable square feet and consist of 65 office properties and four mixed-use properties (collectively, the “Core Properties”). We also own one development property, one redevelopment property and one recently completed not yet stabilized property (collectively, the “Properties”).
Item 2. Properties Overview As of December 31, 2024, we owned 63 properties that contain an aggregate of approximately 11.9 million net rentable square feet and consist of 59 office properties and four mixed-use properties (collectively, the “Core Properties”). We also own one recently completed not yet stabilized property (collectively, the “Properties”).
The properties are located in or near Philadelphia, Pennsylvania; Austin, Texas; Washington, D.C.; Southern New Jersey; and Wilmington, Delaware. As of December 31, 2023, the properties, excluding properties under development and redevelopment, were approximately 88.0% occupied. As of December 31, 2023, we also owned economic interests in twelve unconsolidated real estate ventures.
The properties are located in or near Philadelphia, Pennsylvania; Austin, Texas; Washington, D.C.; Southern New Jersey; and Wilmington, Delaware. As of December 31, 2024, the properties were approximately 87.8% occupied. As of December 31, 2024, we also owned economic interests in ten unconsolidated real estate ventures.
See Note 4 “Investment in Unconsolidated Real Estate Ventures,” to our Consolidated Financial Statements for further information. 25 Property Statistics The following table shows lease expirations for the Core Properties as of December 31, 2023, during each of the next 10 years and thereafter.
The following table shows lease expirations for the Core Properties as of December 31, 2024, during each of the next 10 years and thereafter.
Tenant reimbursements generally include payment of a portion of real estate taxes, operating expenses, and common area maintenance and utility charges. Developments/Redevelopments As of December 31, 2023, we were developing/redeveloping 0.1 million rentable square feet of office/life science properties and one parking facility.
Tenant reimbursements generally include payment of a portion of real estate taxes, operating expenses, and common area maintenance and utility charges.
This table assumes no exercise of renewal options or termination rights: Year of Lease Expiration December 31, Rentable Square Feet (in thousands) Final Annualized Base Rent Under Expiring Leases (a) (in thousands) Percentage of Total Final Annualized Base Rent Under Expiring Leases 2024 769 $ 27,410 5.5 % 2025 898 35,558 7.1 % 2026 744 32,086 6.4 % 2027 1,436 58,968 11.8 % 2028 1,090 44,730 8.9 % 2029 1,747 79,364 15.9 % 2030 817 39,512 7.9 % 2031 487 25,195 5.0 % 2032 495 25,723 5.1 % 2033 477 28,805 5.8 % 2034 and thereafter 2,221 102,622 20.5 % 11,181 $ 499,973 100 % (a) Represents the annualized cash rental rate of base rents, including tenant reimbursements, in the final month prior to expiration.
This table assumes no exercise of renewal options or termination rights: Year of Lease Expiration December 31, Rentable Square Feet (in thousands) Final Annualized Base Rent Under Expiring Leases (a) (in thousands) Percentage of Total Final Annualized Base Rent Under Expiring Leases 2025 507 $ 17,245 3.6 % 2026 679 28,935 6.1 % 2027 1,333 54,784 11.5 % 2028 1,238 49,526 10.4 % 2029 1,734 77,909 16.4 % 2030 885 41,762 8.8 % 2031 571 29,141 6.1 % 2032 621 30,835 6.5 % 2033 441 26,576 5.6 % 2034 1,255 67,574 14.2 % 2035 and thereafter 1,218 50,178 10.6 % 10,482 $ 474,465 100 % (a) Represents the annualized cash rental rate of base rents, including tenant reimbursements, in the final month prior to expiration.
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We refer to these ventures as “Commerce Square Venture,” “Mid-Atlantic Office Venture,” “MAP Venture,” “Cira Square,” “KB JV,” “One Uptown – Multifamily,” “One Uptown – Office,” “JBG,” “3025 JFK Venture” and “3151 Market Street Venture.” See Note 4 “Investment in Unconsolidated Real Estate Ventures,” to our Consolidated Financial Statements for further information.
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Property Statistics The following table sets forth information with respect to our Core Properties at December 31, 2024: Net Rentable Square Feet % Occupied PHILADELPHIA CENTRAL BUSINESS DISTRICT SEGMENT Cira Center 730,187 89.1 % 1717 Arch Street 1,029,413 87.7 % 130 North 18th Street 595,041 99.5 % 100 North 18th Street 708,844 96.1 % 1900 Market Street 456,922 94.4 % 3020 Market Street 190,925 94.3 % 3000 Market Street 90,556 100.0 % 618 Market Street (a) 15,878 80.2 % FMC Tower at Cira Center South (a) 625,863 98.5 % The Bulletin Building (a) 282,709 95.3 % 2930 Chestnut Street (a) 9,788 100.0 % PHILADELPHIA CENTRAL BUSINESS DISTRICT SEGMENT SUBTOTAL 4,736,126 93.7 % PENNSYLVANIA SUBURBS SEGMENT Six Tower Bridge 116,174 76.2 % 426 West Lancaster Avenue 55,941 100.0 % 640 Freedom Business Center 132,000 99.1 % 620 Freedom Business Center 86,570 98.4 % 26 1000 First Avenue 74,139 100.0 % 1060 First Avenue 77,718 100.0 % 630 Freedom Business Center 86,683 100.0 % 1020 First Avenue 74,556 100.0 % 1040 First Avenue 75,488 100.0 % 610 Freedom Business Center 62,991 55.7 % 600 Park Avenue 39,000 100.0 % 933 First Avenue 111,053 100.0 % 500 North Gulph Road 100,820 100.0 % 401 Plymouth Road 204,186 67.1 % Metroplex I 120,877 90.7 % 150 Radnor Chester Road 340,380 100.0 % One Radnor Corporate Center 201,874 100.0 % 201 King of Prussia Road 251,434 88.0 % 555 Lancaster Avenue 241,687 92.0 % Four Radnor Corporate Center 164,464 63.0 % Five Radnor Corporate Center 164,505 89.4 % Three Radnor Corporate Center 119,087 65.2 % Two Radnor Corporate Center 97,576 84.3 % 130 Radnor Chester Road 71,349 100.0 % 170 Radnor Chester Road 68,143 75.0 % 155 King of Prussia Road 144,685 100.0 % 101 West Elm Street 173,827 53.5 % 1 West Elm Street 97,737 100.0 % PENNSYLVANIA SUBURBS SEGMENT SUBTOTAL 3,554,944 88.2 % AUSTIN SEGMENT 401-405 Colorado Street 205,803 100.0 % Broadmoor Austin - Bldg 1 202,850 100.0 % Broadmoor Austin - Bldg 3 198,306 100.0 % Broadmoor Austin - Bldg 4 142,386 100.0 % Broadmoor Austin - Bldg 6 144,249 100.0 % Four Points Center 3 164,818 100.0 % Four Barton Skyway 222,580 94.4 % Four Points Centre 192,396 59.7 % River Place - Bldg 1 76,529 18.2 % River Place - Bldg 2 114,491 25.0 % River Place - Bldg 3 113,465 27.1 % River Place - Bldg 4 87,639 31.9 % River Place - Bldg 5 67,601 75.2 % River Place - Bldg 6 62,038 100.0 % River Place - Bldg 7 69,119 84.9 % Quarry Lake II 120,559 36.0 % AUSTIN SEGMENT SUBTOTAL 2,184,829 77.8 % OTHER SEGMENT 27 6600 Rockledge Drive 160,173 100.0 % 1676 International Drive 299,387 82.0 % 8260 Greensboro Drive 158,961 83.0 % 2340 Dulles Corner Boulevard 268,365 91.8 % Promenade at Main Street 31,445 56.1 % Piazza Offices at Main Street 44,708 100.0 % 920 North King Street 203,328 100.0 % 300 Delaware Avenue 298,071 56.6 % OTHER SEGMENT SUBTOTAL 1,464,438 83.2 % TOTAL CORE PORTFOLIO 11,940,337.00 87.8 % (a) These properties are mixed use properties.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe generally consider these disputes to be routine to the conduct of our business and management believes that the final outcome of such proceedings will not have a material adverse effect on our financial position, results of operations or liquidity. Item 4. Mine Safety Disclosures Not applicable. 27 PART II
Biggest changeWe generally consider these disputes to be routine to the conduct of our business and management believes that the final outcome of such proceedings will not have a material adverse effect on our financial position, results of operations or liquidity. Item 4. Mine Safety Disclosures Not applicable. 29 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 FTSE NAREIT All Equity REITs Index 100.00 125.53 150.58 172.90 137.56 160.85 Russell 2000 Index 100.00 128.66 122.07 172.49 129.45 144.16 FTSE NAREIT Equity Office Index 100.00 131.42 107.19 130.77 81.58 83.23 Brandywine Realty Trust 100.00 128.95 104.38 124.73 61.55 62.61 Item 6. [Reserved]
Biggest changePeriod Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 S&P 500 Index 100.00 118.40 152.39 124.79 157.59 197.02 FTSE NAREIT All Equity REITs Index 100.00 119.96 137.74 109.59 128.14 142.93 Russell 2000 Index 100.00 94.88 134.06 100.62 112.04 117.56 FTSE NAREIT Equity Office Index 100.00 81.56 99.51 62.07 63.34 76.95 Brandywine Realty Trust 100.00 80.94 96.72 47.73 48.55 56.87 Item 6. [Reserved]
During 2023, we redeemed 872 Class A units of limited partnership interest held by unaffiliated third parties for total cash payments of $5,000. 28 SHARE PERFORMANCE GRAPH The SEC requires us to present a chart comparing the cumulative total shareholder return on the common shares with the cumulative total shareholder return of (i) a broad equity index and (ii) a published industry or peer group index.
During 2023, we redeemed 872 Class A units of limited partnership interest held by unaffiliated third parties for total cash payments of $5,000. 30 SHARE PERFORMANCE GRAPH The SEC requires us to present a chart comparing the cumulative total shareholder return on the common shares with the cumulative total shareholder return of (i) a broad equity index and (ii) a published industry or peer group index.
See Item 6., “Selected Financial Data – Liquidity,” and Note 9 “Debt Obligations,” to our Consolidated Financial Statements for further details. Our Board of Trustees has adopted a dividend policy designed such that our quarterly distributions are consistent with our normalized annualized taxable income.
See Item 6., “Selected Financial Data – Liquidity,” and Note 8 “Debt Obligations,” to our Consolidated Financial Statements for further details. Our Board of Trustees has adopted a dividend policy designed such that our quarterly distributions are consistent with our normalized annualized taxable income.
For each quarter in 2023 and 2022, the Operating Partnership paid a cash distribution per Class A unit in an amount equal to the dividend paid on a common share for each such quarter.
For each quarter in 2024 and 2023, the Operating Partnership paid a cash distribution per Class A unit in an amount equal to the dividend paid on a common share for each such quarter.
The following chart compares the cumulative total shareholder return for the common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the FTSE NAREIT All Equity REITs Index, (iii) the Russell 2000 Index and (iv) the FTSE NAREIT Equity Office Index for the period beginning December 31, 2018 and ending December 31, 2023 and assumes an investment of $100, with reinvestment of all dividends, has been made in the common shares and in each index on December 31, 2018.
The following chart compares the cumulative total shareholder return for the common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the FTSE NAREIT All Equity REITs Index, (iii) the Russell 2000 Index and (iv) the FTSE NAREIT Equity Office Index for the period beginning December 31, 2019 and ending December 31, 2024 and assumes an investment of $100, with reinvestment of all dividends, has been made in the common shares and in each index on December 31, 2019.
See Note 15 “Share-Based Compensation, 401(k) Plan and Deferred Compensation,” to our Consolidated Financial Statements for information related to compensation plans under which our common shares are authorized for issuance. See Note 13 “Beneficiaries' Equity of the Parent Company,” to our Consolidated Financial Statements for further information related to our share repurchase program during the year ended December 31, 2023.
See Note 14 “Share-Based Compensation, 401(k) Plan and Deferred Compensation,” to our Consolidated Financial Statements for information related to compensation plans under which our common shares are authorized for issuance. See Note 12 “Beneficiaries' Equity of the Parent Company,” to our Consolidated Financial Statements for further information related to our share repurchase program during the year ended December 31, 2024.
On February 20, 2024, there were 541 holders of record of our common shares and 20 holders of record (in addition to Brandywine Realty Trust) of Class A units of limited partnership interest in the Operating Partnership. On February 20, 2024, the last reported sales price of the common shares on the NYSE was $4.15.
On February 18, 2025, there were 524 holders of record of our common shares and 20 holders of record (in addition to Brandywine Realty Trust) of Class A units of limited partnership interest in the Operating Partnership. On February 18, 2025, the last reported sales price of the common shares on the NYSE was $4.90.
In 2021, we redeemed 157,651 Class A units of limited partnership interest held by unaffiliated third parties for total cash payments of $2.3 million. During 2022, we redeemed 307,516 Class A units of limited partnership interest held by unaffiliated third parties for total cash payments of $4.0 million.
During 2022, we redeemed 307,516 Class A units of limited partnership interest held by unaffiliated third parties for total cash payments of $4.0 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA property is excluded from our Same Store Property Portfolio and moved into Development/Redevelopment in the period that we determine to proceed with development/redevelopment for a future development strategy, and (e) “2022 and 2023 Dispositions,” which represents four properties disposed of during 2022 and 2023. 35 Comparison of Year Ended December 31, 2023 to the Year Ended December 31, 2022 Same Store Property Portfolio Recently Completed/Acquired Properties Development/Redevelopment Properties Other (Eliminations) (a) Total Portfolio (dollars and square feet in millions except per share amounts) 2023 2022 $ Change % Change 2023 2022 2023 2022 2023 2022 2023 2022 $ Change % Change Revenue: Rents $ 428.9 $ 429.6 $ (0.7) (0.2) % $ 24.6 $ 6.6 $ — $ — $ 26.3 $ 34.7 $ 479.8 $ 470.9 $ 8.9 1.9 % Third party management fees, labor reimbursement and leasing — — — — % — — — — 24.4 24.1 24.4 24.1 0.3 1.2 % Other 1.1 1.0 0.1 10.0 % — 0.1 — — 9.4 10.0 10.5 11.1 (0.6) (5.4) % Total revenue 430.0 430.6 (0.6) (0.1) % 24.6 6.7 — — 60.1 68.8 514.7 506.1 8.6 1.7 % Property operating expenses 114.7 114.8 (0.1) (0.1) % 5.3 1.9 — — 9.9 13.5 129.9 130.2 (0.3) (0.2) % Real estate taxes 44.6 47.1 (2.5) (5.3) % 2.9 2.2 — — 2.5 4.3 50.0 53.6 (3.6) (6.7) % Third party management expenses — — — — % — — — — 10.1 10.5 10.1 10.5 (0.4) (3.8) % Net operating income 270.7 268.7 2.0 0.7 % 16.4 2.6 — — 37.6 40.5 324.7 311.8 12.9 4.1 % Depreciation and amortization 155.6 152.0 3.6 2.4 % 10.4 3.1 — — 22.8 22.9 188.8 178.0 10.8 6.1 % General & administrative expenses 34.8 35.0 34.8 35.0 (0.2) (0.6) % Provision for impairment 131.6 4.7 131.6 4.7 126.9 2,700.0 % Net gain on disposition of real estate (7.7) (17.7) 10.0 (56.5) % Net gain on sale of undepreciated real estate (1.2) (8.0) 6.8 (85.0) % Operating income (loss) $ 115.1 $ 116.7 $ (1.6) (1.4) % $ 6.0 $ (0.5) $ — $ — $ (151.6) $ (22.1) $ (21.6) $ 119.8 $ (141.4) (118.0) % Number of properties 67 67 3 2 72 Square feet 12.2 12.2 0.6 0.1 13.0 Core Occupancy % (b) 87.8 % 90.8 % 84.3 % Other Income (Expense): Interest and investment income 1.7 1.9 (0.2) (10.5) % Interest expense (95.5) (68.8) (26.7) 38.8 % Interest expense — Deferred financing costs (4.4) (3.1) (1.3) 41.9 % Equity in loss of unconsolidated real estate ventures (77.9) (22.0) (55.9) 254.1 % Net gain on real estate venture transactions 0.2 26.7 (26.5) (99.3) % Gain (loss) on early extinguishment of debt 0.2 (0.4) 0.6 (150.0) % Income tax provision (0.1) (0.1) — — % Net income (loss) $ (197.4) $ 54.0 $ (251.4) (465.6) % Net income (loss) attributable to Common Shareholders of Brandywine Realty Trust $ (1.15) $ 0.31 $ (1.46) (471.0) % (a) Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation, third-party management fees, provisions for impairment, and changes in the accrued rent receivable allowance.
Biggest changeA property is excluded from our Same Store Property Portfolio and moved into Development/Redevelopment in the period that we determine to proceed with development/redevelopment for a future development strategy, and (e) “2023 and 2024 Dispositions,” which represents four properties disposed of during 2023 and 2024. 38 Comparison of Year Ended December 31, 2024 to the Year Ended December 31, 2023 Same Store Property Portfolio Recently Completed/Acquired Properties Development/Redevelopment Properties Other (Eliminations) (a) Total Portfolio (dollars and square feet in millions except per share amounts) 2024 2023 $ Change % Change 2024 2023 2024 2023 2024 2023 2024 2023 $ Change % Change Revenue: Rents $ 413.8 $ 417.3 $ (3.5) (0.8) % $ 16.7 $ 9.4 $ — $ — $ 38.7 $ 53.1 $ 469.2 $ 479.8 $ (10.6) (2.2) % Third party management fees, labor reimbursement and leasing — — — — % — — — — 23.7 24.4 23.7 24.4 (0.7) (2.9) % Other 1.1 1.1 — — % — — — — 11.5 9.4 12.6 10.5 2.1 20.0 % Total revenue 414.9 418.4 (3.5) (0.8) % 16.7 9.4 — — 73.9 86.9 505.5 514.7 (9.2) (1.8) % Property operating expenses 111.0 111.2 (0.2) (0.2) % 3.3 1.6 — — 15.6 17.1 129.9 129.9 — — % Real estate taxes 42.3 43.2 (0.9) (2.1) % 1.2 0.5 — — 4.2 6.3 47.7 50.0 (2.3) (4.6) % Third party management expenses — — — — % — — — — 9.7 10.1 9.7 10.1 (0.4) (4.0) % Net operating income 261.6 264.0 (2.4) (0.9) % 12.2 7.3 — — 44.4 53.4 318.2 324.7 (6.5) (2.0) % Depreciation and amortization 144.9 148.9 (4.0) (2.7) % 9.4 6.4 — — 23.9 33.5 178.2 188.8 (10.6) (5.6) % General & administrative expenses 42.8 34.8 42.8 34.8 8.0 23.0 % Provision for impairment 44.7 131.6 44.7 131.6 (86.9) (66.0) % Net gain on disposition of real estate (2.3) (7.7) 5.4 (70.1) % Net gain on sale of undepreciated real estate — (1.2) 1.2 (100.0) % Operating income (loss) $ 116.7 $ 115.1 $ 1.6 1.4 % $ 2.8 $ 0.9 $ — $ — $ (67.0) $ (146.5) $ 54.8 $ (21.6) $ 76.4 (353.7) % Number of properties 61 61 3 — 64 Square feet 11.5 11.5 0.6 — 12.1 Core Occupancy % (b) 87.6 % 89.0 % 56.4 % Other Income (Expense): Interest and investment income 3.8 1.7 2.1 123.5 % Interest expense (116.3) (95.5) (20.8) 21.8 % Interest expense — Deferred financing costs (5.0) (4.4) (0.6) 13.6 % Equity in loss of unconsolidated real estate ventures (191.6) (77.9) (113.7) 146.0 % Net gain on real estate venture transactions 56.8 0.2 56.6 28,300.0 % Gain on early extinguishment of debt 1.0 0.2 0.8 400.0 % Income tax provision — (0.1) 0.1 (100.0) % Net loss $ (196.5) $ (197.4) $ 0.9 (0.5) % Net loss attributable to Common Shareholders of Brandywine Realty Trust $ (1.14) $ (1.15) $ 0.01 (0.9) % (a) Represents certain revenues and expenses at the corporate level as well as various intercompany costs that are eliminated in consolidation, third-party management fees, provisions for impairment, and changes in the accrued rent receivable allowance.
As part of our September 2004 acquisition of a portfolio of properties (which the we refer to as the “TRC acquisition”), we acquired our interest in Two Logan Square, a 708,844 square foot office building in Philadelphia, Pennsylvania primarily through ownership of a second and third mortgage secured by this property.
As part of our September 2004 acquisition of a portfolio of properties (which we refer to as the “TRC acquisition”), we acquired our interest in Two Logan Square, a 708,844 square foot office building in Philadelphia, Pennsylvania primarily through ownership of a second and third mortgage secured by this property.
In determining whether improvements constitute landlord or tenant assets, we consider a number of factors that may require subjective or complex judgments, including: whether the improvements are unique to the tenant or reusable by other tenants; whether the tenant is permitted to alter or remove the improvements without our consent or without compensating us for any lost fair value; whether the ownership of the improvements remains with us or remains with the tenant at the end of the lease term; and whether the economic substance of the lease terms is properly reflected.
In determining whether improvements constitute landlord or tenant assets, we consider a number of factors that may require subjective or complex judgments, including: whether the improvements are unique to the tenant or reusable by other tenants; whether the tenant is permitted to alter or remove the improvements without our consent or without compensating us for any 36 lost fair value; whether the ownership of the improvements remains with us or remains with the tenant at the end of the lease term; and whether the economic substance of the lease terms is properly reflected.
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved.
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Although we believe that the 31 expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved.
The Unsecured Term Loan has a scheduled maturity date of February 28, 2024 with an option to extend for twelve months and bears interest at Daily Simple SOFR plus 1.75% with a 0.10% SOFR adjustment. The Company exercised its option to extend the Facility for an additional twelve months on January 24, 2024.
The Unsecured Term Loan has a scheduled maturity date of February 28, 2024 with an option to extend for twelve months and bears interest at Daily Simple SOFR plus 1.75% with a 0.10% SOFR adjustment. The Company exercised its 42 option to extend the Facility for an additional twelve months on January 24, 2024.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. 32 Impairment We assess each of our real estate investments for indicators of impairment quarterly or when circumstances indicate that a real estate investment may be impaired.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. Impairment We assess each of our real estate investments for indicators of impairment quarterly or when circumstances indicate that a real estate investment may be impaired.
Development Risk Development projects are subject to a variety of risks, including construction delays, construction cost overruns, building moratoriums, inability to obtain financing on favorable terms, inability to lease space at projected rates, inability to enter into construction, development and other agreements on favorable terms, and unexpected environmental and other hazards.
Development and Redevelopment Risk Development and Redevelopment projects are subject to a variety of risks, including construction delays, construction cost overruns, building moratoriums, inability to obtain financing on favorable terms, inability to lease space at projected rates, inability to enter into construction, development and other agreements on favorable terms, and unexpected environmental and other hazards.
See Note 4 “Investment in Unconsolidated Real Estate Ventures” to our Consolidated Financial Statements for further information. 38 LIQUIDITY AND CAPITAL RESOURCES General Our principal liquidity funding needs for the next twelve months are as follows: • normal recurring expenses; • capital expenditures, including capital and tenant improvements and leasing costs; • debt service and principal repayment obligations; • current development and redevelopment costs; • commitments to unconsolidated real estate ventures; • distributions to shareholders to maintain our REIT status; • possible acquisitions of properties, either directly or indirectly through the acquisition of equity interest therein; and • possible common share repurchases.
See Note 4 “Investment in Unconsolidated Real Estate Ventures” to our Consolidated Financial Statements for further information. 41 LIQUIDITY AND CAPITAL RESOURCES General Our principal liquidity funding needs for the next twelve months are as follows: • normal recurring expenses; • capital expenditures, including capital and tenant improvements and leasing costs; • debt service and principal repayment obligations; • current development and redevelopment costs; • commitments to unconsolidated real estate ventures; • distributions to shareholders to maintain our REIT status; • possible acquisitions of properties, either directly or indirectly through the acquisition of equity interest therein; and • possible common share repurchases.
If the recoverability assessment indicates that the carrying value of a tested real estate investment is not recoverable from estimated undiscounted future cash flows, it is written down to its estimated fair value and an impairment is recognized.
If the recoverability assessment indicates that 35 the carrying value of a tested real estate investment is not recoverable from estimated undiscounted future cash flows, it is written down to its estimated fair value and an impairment is recognized.
These forward-looking statements are inherently uncertain, and actual results may differ from expectations. “See “Forward-Looking Statements” immediately before Part I of this report. OVERVIEW During the twelve months ended December 31, 2023, we owned and managed properties within four segments: (1) Philadelphia Central Business District (“Philadelphia CBD”), (2) Pennsylvania Suburbs, (3) Austin, Texas, and (4) Other.
These forward-looking statements are inherently uncertain, and actual results may differ from expectations. “See “Forward-Looking Statements” immediately before Part I of this report. OVERVIEW During the twelve months ended December 31, 2024, we owned and managed properties within four segments: (1) Philadelphia Central Business District (“Philadelphia CBD”), (2) Pennsylvania Suburbs, (3) Austin, Texas, and (4) Other.
If one or more rating 40 agencies were to downgrade our unsecured credit rating, our access to the unsecured debt market would be more limited and the interest rate under our unsecured credit facility and unsecured term loan would increase.
If one or more rating agencies were to downgrade our unsecured credit rating, our access to the unsecured debt market would be more limited and the interest rate under our unsecured credit facility and unsecured term loan would increase.
If the 33 improvements are landlord assets, we capitalize the cost of the improvements and recognize depreciation expense associated with such improvements over the shorter of the estimated useful life or the term of the lease.
If the improvements are landlord assets, we capitalize the cost of the improvements and recognize depreciation expense associated with such improvements over the shorter of the estimated useful life or the term of the lease.
NOI does not reflect interest expenses, real estate impairments, depreciation and amortization costs, capital expenditures, and leasing costs. We believe that net income, as defined by GAAP, is the most appropriate earnings measure. See Note 19 “Segment Information,” to our Consolidated Financial Statements for a reconciliation of NOI to our consolidated net income (loss) as defined by GAAP.
NOI does not reflect interest expenses, real estate impairments, depreciation and amortization costs, capital expenditures, and leasing costs. We believe that net income, as defined by GAAP, is the most appropriate earnings measure. See Note 18 “Segment Information,” to our Consolidated Financial Statements for a reconciliation of NOI to our consolidated net income (loss) as defined by GAAP.
Inflation Substantially all our leases are structured as base year or triple net leases which provide for reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements on a per square-foot basis, or in some cases, annual reimbursement of operating expenses above certain per square-foot allowances.
Inflation and Lease Pass-Through Provisions Substantially all our leases are structured as base year or triple net leases which provide for reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements on a per square-foot basis, or in some cases, annual reimbursement of operating expenses above certain per square-foot allowances.
The indenture under which the Operating Partnership issued its unsecured notes contains financial covenants, including: (i) a leverage ratio not to exceed 60%; (ii) a secured debt leverage ratio not to exceed 40%; (iii) a debt service 43 coverage ratio of greater than 1.5 to 1.0; and (iv) an unencumbered asset value of not less than 150% of unsecured debt.
The indenture under which the Operating Partnership issued its unsecured notes contains financial covenants, including: (i) a leverage ratio not to exceed 60%; (ii) a secured debt leverage ratio not to exceed 40%; (iii) a debt service 46 coverage ratio of greater than 1.5 to 1.0; and (iv) an unencumbered asset value of not less than 150% of unsecured debt.
See Note 9 “Debt Obligations,” for further information. On August 15, 2023, we entered into a construction loan agreement secured by the development project at 155 King of Prussia Road in Radnor, Pennsylvania in the aggregate principal amount of $50.0 million (the “Construction Loan”).
See Note 8 “Debt Obligations,” for further information. On August 15, 2023, we entered into a construction loan agreement secured by the development project at 155 King of Prussia Road in Radnor, Pennsylvania in the aggregate principal amount of $50.0 million (the “Construction Loan”).
Based on the foregoing, as well as cash flows from operations net of dividend requirements, we believe we have sufficient capital to fund our remaining capital requirements on existing development and redevelopment projects and pursue additional attractive investment opportunities. We expect that our primary uses of capital during 2024 will be to fund our current development and redevelopment projects.
Based on the foregoing, as well as cash flows from operations net of dividend requirements, we believe we have sufficient capital to fund our remaining capital requirements on existing development and redevelopment projects and pursue additional attractive investment opportunities. We expect that our primary uses of capital during 2025 will be to fund our current development and redevelopment projects.
See Note 20 “Commitments and Contingencies,” to our Consolidated Financial Statements for further details on payment guarantees provided on the behalf of real estate ventures. Interest Rate Risk and Sensitivity Analysis The analysis below presents the sensitivity of the market value of the Operating Partnership’s financial instruments to selected changes in market rates.
See Note 19 “Commitments and Contingencies,” to our Consolidated Financial Statements for further details on payment guarantees provided on the behalf of real estate ventures. Interest Rate Risk and Sensitivity Analysis The analysis below presents the sensitivity of the market value of the Operating Partnership’s financial instruments to selected changes in market rates.
See Note 13 “Beneficiaries' Equity of the Parent Company,” to our Consolidated Financial Statements for further information related to our share repurchase program. We expect to fund any additional share repurchases with a combination of available cash balances and availability under our unsecured credit facility.
See Note 12 “Beneficiaries' Equity of the Parent Company,” to our Consolidated Financial Statements for further information related to our share repurchase program. We expect to fund any additional share repurchases with a combination of available cash balances and availability under our unsecured credit facility.
In addition, a material adverse change in cash provided by operations could adversely affect our compliance with financial performance covenants under our unsecured credit facility, including unsecured term loans and unsecured notes. As of December 31, 2023 we were in compliance with all of our debt covenants and requirement obligations.
In addition, a material adverse change in cash provided by operations could adversely affect our compliance with financial performance covenants under our unsecured credit facility, including unsecured term loans and unsecured notes. As of December 31, 2024, we were in compliance with all of our debt covenants and requirement obligations.
Net Gain on Disposition of Real Estate The $7.7 million gain on disposition of real estate for 2023 is due to the sale of a retail building located at 200 North Radnor Chester Road, Radnor, Pennsylvania for a gross sales price of $14.2 million and net cash proceeds of $13.8 million.
The $7.7 million gain on disposition of real estate for 2023 is due to the sale of a retail building located at 200 North Radnor Chester Road, Radnor, PA for a gross sales price of $14.2 million and net cash proceeds of $13.8 million.
NOI is a non-GAAP financial measure that we use internally to evaluate the operating performance of our real estate assets by segment, as presented in Note 19 “Segment Information,” to our Consolidated Financial Statements, and of our business as a whole.
NOI is a non-GAAP financial measure that we use internally to evaluate the operating performance of our real estate assets by segment, as presented in Note 18 “Segment Information,” to our Consolidated Financial Statements, and of our business as a whole.
Equity In order to maintain its qualification as a REIT, the Parent Company is required to, among other things, pay dividends to its shareholders of at least 90% of its REIT taxable income. During the year ended December 31, 2023, the Parent Company paid dividends in excess of the 90% criterion.
Equity In order to maintain its qualification as a REIT, the Parent Company is required to, among other things, pay dividends to its shareholders of at least 90% of its REIT taxable income. During the year ended December 31, 2024, the Parent Company paid dividends in excess of the 90% criterion.
As of December 31, 2023, the Parent Company owned a 99.7% interest in the Operating Partnership. The remaining interest of approximately 0.3% pertains to common limited partnership interests owned by non-affiliated investors who contributed property to the Operating Partnership in exchange for their interests.
As of December 31, 2024, the Parent Company owned a 99.7% interest in the Operating Partnership. The remaining interest of approximately 0.3% pertains to common limited partnership interests owned by non-affiliated investors who contributed property to the Operating Partnership in exchange for their interests.
Refer to Part II, Item 7. “Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the results of operations for the year ended December 31, 2021 which is presented therein in the form of a year-to-year comparison to the year ended December 31, 2022.
Refer to Part II, Item 7. “Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the results of operations for the year ended December 31, 2022 which is presented therein in the form of a year-to-year comparison to the year ended December 31, 2023.
With uncertain economic conditions, vacancy rates may increase, effective rental rates on new and renewed leases may decrease and tenant installation costs, including concessions, may increase in most or all of our markets during 2024 and possibly beyond.
With uncertain economic conditions, vacancy rates may increase, effective rental rates on new and renewed leases may decrease and tenant installation costs, including concessions, may increase in most or all of our markets during 2025 and possibly beyond.
We generate cash and revenue from leases of space at our Properties and, to a lesser extent, from the management and development of properties owned by third parties and from investments in the unconsolidated real estate ventures.
We generate cash and revenue from leases of space at our Properties and, to a lesser extent, from the management and development/redevelopment of properties owned by third parties (primarily unconsolidated real estate ventures) and from investments in the unconsolidated real estate ventures.
The Other segment includes properties in Northern Virginia, Washington, D.C., Southern Maryland, Camden County, New Jersey and New Castle County, Delaware. In addition to the four segments, our corporate group is responsible for cash and investment management, development of certain real estate properties during the construction period, and certain other general support functions.
The Other segment includes properties in Northern Virginia, Washington, D.C., Southern Maryland, Camden County, New Jersey and New Castle County, Delaware. In addition to the four segments, our corporate group is responsible for cash and investment management, development/redevelopment of certain properties during the construction period, and certain other general support functions.
The Same Store Property Portfolio includes properties acquired or placed in service on or prior to January 1, 2022 and owned and consolidated through December 31, 2023, excluding properties classified as held for sale, (b) “Total Portfolio,” which represents all properties owned and consolidated by us during 2023 and 2022, (c) “Recently Completed/Acquired Properties,” which represents three properties placed into service or acquired on or subsequent to January 1, 2022, (d) “Development/Redevelopment Properties,” which represents two properties currently in development/redevelopment.
The Same Store Property Portfolio includes properties acquired or placed in service on or prior to January 1, 2023 and owned and consolidated through December 31, 2024, excluding properties classified as held for sale, (b) “Total Portfolio,” which represents all properties owned and consolidated by us during 2024 and 2023, (c) “Recently Completed/Acquired Properties,” which represents three properties placed into service or acquired on or subsequent to January 1, 2023, (d) “Development/Redevelopment Properties,” which represents zero properties currently in development/redevelopment.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Consolidated Financial Statements appearing elsewhere herein and is based primarily on our Consolidated Financial Statements for the years ended December 31, 2023, 2022 and 29 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Consolidated Financial Statements appearing elsewhere herein and is based primarily on our Consolidated Financial Statements for the years ended December 31, 2024, 2023 and 2022.
Changes in the assumptions used to estimate future common development costs could result in a significant impact on the amounts recorded as net gain on disposition of real estate or net gain on sale of undepreciated real estate. 34 RESULTS OF OPERATIONS The following discussion is based on our Consolidated Financial Statements for the years ended December 31, 2023 and 2022.
Changes in the assumptions used to estimate future common development costs could result in a significant impact on the amounts recorded as net gain on disposition of real estate or net gain on sale of undepreciated real estate. 37 RESULTS OF OPERATIONS The following discussion is based on our Consolidated Financial Statements for the years ended December 31, 2024 and 2023.
Capital Recycling The Operating Partnership also considers net sales of selected properties and recapitalization of unconsolidated real estate ventures as additional sources of managing its liquidity.
Liquidity The Operating Partnership also considers net sales of selected properties and recapitalization of unconsolidated real estate ventures as additional sources of managing its liquidity.
Cash is used in investing activities to fund acquisitions, development, or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that enable us to take advantage of our development, leasing, financing, and property management skills and invest in existing buildings that meet our investment criteria.
Cash is used in investing activities to fund acquisitions, development, or redevelopment projects and recurring and nonrecurring capital expenditures. We selectively invest in new projects that we expect will enable us to take advantage of our development, leasing, financing, and property management skills and invest in existing buildings that meet our investment criteria for additional capital.
Our financial and operating performance is dependent upon the demand for office, life science, residential, parking, and retail space in our markets, our leasing results, our acquisition, disposition and development activity, our financing activity, our cash requirements and economic and market conditions, including prevailing interest rates.
Our financial condition and operating performance are dependent upon the demand for office, residential, life science, parking and retail space in our markets, our leasing results, our acquisition, disposition and development/redevelopment activity, our financing activity, our cash requirements and economic and market conditions, including prevailing interest rates.
If and when our plans change, we revise our recoverability analyses to use the cash flows expected from the operations and eventual disposition of each asset using holding periods that are consistent with our revised plans. Real estate investment fair values are estimated based on contract prices, discounted cash flows, or comparable sales.
If and when our plans change, we revise our recoverability analyses to use the cash flows expected from the operations and eventual disposition of each asset using holding periods that are consistent with our revised plans. Real estate investment fair values are estimated based on agreements with third parties, discounted cash flows, or comparable sales.
Our accrued rent receivable allowance was $2.7 million or 1.4% of our accrued rent receivable balance as of December 31, 2023 compared to $3.9 million or 2.1% of our accrued rent receivable balance as of December 31, 2022. 31 If economic conditions deteriorate, including as a result of inflation and high interest rates we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents.
Our accrued rent receivable allowance was $0.9 million or 0.5% of our accrued rent receivable balance as of December 31, 2024 compared to $2.7 million or 1.4% of our accrued rent receivable balance as of December 31, 2023. 34 If economic conditions deteriorate, including as a result of inflation and high interest rates we may experience increases in past due accounts, defaults, lower occupancy and reduced effective rents.
The Operating Partnership is in compliance with all covenants as of December 31, 2023.
The Operating Partnership is in compliance with all covenants as of December 31, 2024.
During the third quarter of 2023, Moody’s downgraded our senior unsecured credit rating from Baa3 to Ba1. As a result of the downgrade, the interest rate on the 2028 Notes increased 25 basis points to 7.80% in September 2023 due to the coupon adjustment provisions within the note.
Additionally, interest expense increased during the third quarter of 2023 when Moody’s downgraded our senior unsecured credit rating from Baa3 to Ba1. As a result of the downgrade, the interest rate on our 2028 Notes increased 25 basis points in September 2023 due to the coupon adjustment provisions within the 2028 Notes.
Leases that accounted for approximately 5.5% of our aggregate final annualized base rents as of December 31, 2023 (representing approximately 6.9% of the net rentable square feet of the properties) are scheduled to expire without penalty in 2024. We maintain an active dialogue with our tenants in an effort to maximize lease renewals.
Leases that accounted for approximately 3.9% of our aggregate final annualized base rents as of December 31, 2024 (representing approximately 4.2% of the net rentable square feet of the properties) are scheduled to expire without penalty in 2025. We maintain an active dialogue with our tenants in an effort to maximize lease renewals.
From time to time or as the need arises, we use derivative instruments to manage interest rate risk exposures and not for speculative or trading purposes. The total outstanding principal balance of our variable rate debt was approximately $412.4 million as of December 31, 2023.
From time to time or as the need arises, we use derivative instruments to manage interest rate risk exposures and not for speculative or trading purposes. The total outstanding principal balance of our variable rate debt was approximately $431.3 million as of December 31, 2024.
If market rates of interest decrease by 100 basis points, the fair value of our outstanding variable rate debt would increase by approximately $13.1 million at December 31, 2023. These amounts were determined solely by considering the impact of hypothetical interest rates on our financial instruments.
If market rates of interest decrease by 100 basis points, the fair value of our outstanding variable rate debt would increase by approximately $11.5 million at December 31, 2024. These amounts were determined solely by considering the impact of hypothetical interest rates on our financial instruments.
Our Properties provide a relatively consistent stream of cash flows that provides us with the re/.sources to fund operating expenses, debt service and quarterly dividends. The decrease in operating cash flows is primarily due to the decrease in average occupancy in 2023 compared to 2022.
Our Properties provide a relatively consistent stream of cash flows that provides us with the resources to fund operating expenses, debt service and quarterly dividends. The increase in operating cash flows is primarily due to the decrease in average occupancy in 2024 compared to 2023.
See Note 13 “Beneficiaries' Equity of the Parent Company,” to our Consolidated Financial Statements for further information related to our dividends declared for the fourth quarter of 2023.
See Note 12 “Beneficiaries' Equity of the Parent Company,” to our Consolidated Financial Statements for further information related to our dividends declared for the fourth quarter of 2024.
As of December 31, 2023 the following recently completed development project was not yet stabilized (dollars, in thousands): Property/Portfolio Name Location Completion Date Activity Type Approximate Square Footage Estimated Costs Amount Funded 250 King of Prussia Road Radnor, PA Q3 2022 Redevelopment 168,294 $ 103,680 (a) $ 88,244 (a) Total project costs include $20.6 million of existing property basis.
As of December 31, 2024, the following recently completed development project was not yet stabilized (dollars, in thousands): Property/Portfolio Name Location Completion Date Activity Type Approximate Square Footage Estimated Costs Amount Funded 250 King of Prussia Road Radnor, PA Q3 2022 Redevelopment 168,294 $ 102,563 (a) $ 90,734 (a) Total project costs include $20.6 million of existing property basis.
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 The following comparison for the year ended December 31, 2023 to the year ended December 31, 2022, makes reference to the effect of the following: (a) “Same Store Property Portfolio,” which represents 67 properties containing an aggregate of approximately 12.2 million net rentable square feet that we owned and consolidated for the twelve-month periods ended December 31, 2023 and 2022.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 The following comparison for the year ended December 31, 2024 to the year ended December 31, 2023, makes reference to the effect of the following: (a) “Same Store Property Portfolio,” which represents 61 properties containing an aggregate of approximately 11.5 million net rentable square feet that we owned and consolidated for the twelve-month periods ended December 31, 2024 and 2023.
Scheduled principal payments and related weighted average annual effective interest rates for our debt as of December 31, 2023 were as follows (dollars in thousands): Period Principal maturities Weighted Average Interest Rate of Maturing Debt 2024 $ 340,000 3.8 % 2025 70,000 7.2 % 2026 13,824 7.8 % 2027 700,000 4.4 % 2028 595,000 7.1 % 2029 350,000 4.3 % 2030 — — % 2031 — — % 2032 — — % 2033 — — % Thereafter 78,610 6.9 % Totals $ 2,147,434 5.2 % Unsecured Debt The Operating Partnership is the issuer of our unsecured notes which are fully and unconditionally guaranteed by the Parent Company.
Scheduled principal payments and related weighted average annual effective interest rates for our debt as of December 31, 2024 were as follows (dollars in thousands): Period Principal maturities Weighted Average Interest Rate of Maturing Debt 2025 $ 70,000 6.3 % 2026 32,734 7.1 % 2027 700,000 4.5 % 2028 595,000 7.4 % 2029 750,000 6.8 % 2030 — — % 2031 — — % 2032 — — % 2033 — — % 2034 — — % Thereafter 78,610 5.2 % Totals $ 2,226,344 6.2 % Unsecured Debt The Operating Partnership is the issuer of our unsecured notes which are fully and unconditionally guaranteed by the Parent Company.
The 2028 Notes include an interest rate adjustment provision whereby the interest rate payable on the notes is subject to a 25 basis point adjustment if either Moody's Investors Services Inc, and its successors, ("Moody's") or S&P Global Ratings, and its successors ("S&P") downgrades (or subsequently upgrades) its rating assigned to the 2028 Notes.
Our outstanding 7.55% Guaranteed Notes due 2028 (the “2028 Notes”) include an interest rate adjustment provision whereby the interest rate payable on the 2028 Notes is subject to a 25 basis point adjustment if either Moody's Investors Services Inc, and its successors ("Moody's"), or S&P Global Ratings, and its successors ("S&P") downgrades (or subsequently upgrades) its rating assigned to the 2028 Notes.
Cash Flows The following discussion of our cash flows is based on the consolidated statement of cash flows and is not meant to be a comprehensive discussion of the changes in our cash flows for the years presented. 41 As of December 31, 2023 and 2022, we maintained cash and cash equivalents and restricted cash of $67.5 million and $17.6 million, respectively.
Cash Flows The following discussion of our cash flows is based on the consolidated statement of cash flows and is not meant to be a comprehensive discussion of the changes in our cash flows for the years presented. 44 As of December 31, 2024 and 2023, we maintained cash and cash equivalents and restricted cash of $96.2 million and $67.5 million, respectively.
During the second quarter of 2023, we recognized a provision for impairment of $4.5 million on an office property located in our Austin Texas, segment which met the held for sale criteria as of June 30, 2023 and was sold during the three months ended September 30, 2023.
During the second quarter of 2023, we recognized a provision for impairment of $4.5 million on an office property located in our Austin Texas, segment which met the held for sale criteria as of June 30, 2023 and was sold during the three months ended September 30, 2023. See Note 3 “Real Estate Investments,” for further information.
We use multiple financing sources to fund our long-term capital needs. When needed, we use borrowings under our unsecured credit facility for general business purposes, including to meet debt maturities and to fund distributions to shareholders as well as development and acquisition costs and other expenses.
When needed, we use borrowings under our unsecured credit facility for general business purposes, including to meet debt maturities and to fund distributions to shareholders as well as development and acquisition costs and other expenses.
As of December 31, 2023, our consolidated debt consisted of (i) unsecured notes with an outstanding principal balance of $1,490.0 million, all of which are fixed rate borrowings, (ii) variable rate debt consisting of trust preferred securities with an outstanding principal balance of $78.6 million, (iii) a $600.0 million Credit Facility with no outstanding borrowings, (iv) a secured fixed rate term loan with an outstanding principal balance of $245.0 million, (v) a construction loan for the property at 155 King of Prussia Road with an outstanding balance of $13.8 million and (v) two unsecured term loans of $250.0 million and $70.0 million.
As of December 31, 2024, our consolidated debt consisted of (i) unsecured notes with an outstanding principal balance of $1,550.0 million, all of which are fixed rate borrowings, (ii) variable rate debt consisting of trust preferred securities that have been swapped to fixed rates with an outstanding principal balance of $78.6 million, (iii) a $600.0 million Credit Facility with no outstanding borrowings, (iv) a secured fixed rate term loan with an outstanding principal balance of $245.0 million, (v) a construction loan for the property at 155 King of Prussia Road with an outstanding balance of $32.7 million and (v) two unsecured term loans of $250.0 million and $70.0 million.
We estimate that, as of December 31, 2023, these additional contributions, which are not fixed under the terms of agreement, will be $2.2 million. See Note 20 “Commitments and Contingencies,” to our Consolidated Financial Statements for further information.
We are also committed to making additional contributions under the program. We estimate that, as of December 31, 2024, these additional contributions, which are not fixed under the terms of agreement, will be $2.0 million. See Note 19 “Commitments and Contingencies,” to our Consolidated Financial Statements for further information.
As of December 31, 2023, based on prevailing interest rates and credit spreads, the fair value of our unsecured notes was $1,386.6 million. For sensitivity purposes, a 100 basis point change in the discount rate equates to a change in the total fair value of our debt of approximately $13.9 million at December 31, 2023.
As of December 31, 2024, based on prevailing interest rates and credit spreads, the fair value of our unsecured notes was $1,537.2 million. For sensitivity purposes, a 100 basis point change in the discount rate equates to a change in the total fair value of our debt of approximately $15.4 million at December 31, 2024.
As of December 31, 2023 the following active unconsolidated real estate venture development projects remain under construction in progress and we were proceeding on the following activity (dollars, in thousands): Property/Portfolio Name Location Expected Completion Date Approximate Square Footage Estimated Costs Amount Funded Construction Loan Financing Our Share Remaining to be Funded Partner's Share Remaining to be Funded 3025 JFK Boulevard (60%) Philadelphia, PA Q4 2023 (a) $ 300,000 $ 256,608 $ 186,727 $ 5,664 $ — 3151 Market Street (65%) Philadelphia, PA Q3 2024 441,000 $ 316,909 $ 137,094 $ 174,300 (b) $ 5,515 $ — One Uptown - Office (56%) Austin, TX Q4 2023 362,679 $ 201,616 $ 132,358 $ 121,650 $ — $ — One Uptown - Multifamily (50%) Austin, TX Q3 2024 341 Units $ 144,029 $ 99,082 $ 85,000 $ — $ — (a) Mixed used building with 428,000 rentable square feet consisting of 200,000 square feet of life science/innovation office, 219,000 square feet of residential (326 units), and 9,000 square feet of retail.
As of December 31, 2024, the following active unconsolidated real estate venture development projects remain under construction in progress and we were proceeding on the following activity (dollars, in thousands): Property/Portfolio Name Location Completion Date Approximate Square Footage Estimated Costs (c) Amount Funded Construction Loan Financing Our Share Remaining to be Funded Partner's Share Remaining to be Funded 3025 JFK Boulevard (64%) Philadelphia, PA Q4 2023 (a) $ 320,111 $ 289,489 $ 186,727 $ 20,111 $ — 3151 Market Street (65%) Philadelphia, PA Q4 2024 441,000 $ 316,909 $ 207,733 $ 174,300 (b) $ — $ — One Uptown - Office (62%) Austin, TX Q1 2024 362,679 $ 201,616 $ 152,504 $ 121,650 $ — $ — One Uptown - Multifamily (50%) Austin, TX Q3 2024 341 Units $ 144,029 $ 128,984 $ 85,000 $ — $ — (a) Mixed used building with 428,000 rentable square feet consisting of 200,000 square feet of life science, 219,000 square feet of residential (326 units), and 9,000 square feet of retail.
The total fair value of our variable rate debt was approximately $370.7 million at December 31, 2023. For sensitivity purposes, if market rates of interest increase by 100 basis points the fair value of our variable rate debt would decrease by approximately $12.3 million at December 31, 2023.
The total fair value of our variable rate debt was approximately $403.9 million at December 31, 2024. For sensitivity purposes, if market rates of interest increase by 100 basis points the fair value of our variable rate debt would decrease by approximately $10.9 million at December 31, 2024.
(b) On November 23, 2022, our unsecured term loan of $250.0 million was swapped to a fixed rate of 5.01% and matures on June 30, 2027. The effective date of the swap is January 31, 2023.
(b) On November 23, 2022, the unsecured term loan of $250.0 million was swapped to a fixed rate. At December 31, 2024, the fixed rate for this instrument was 5.41% and matures on June 30, 2027. The effective date of the swap was January 31, 2023.
These adverse conditions could impact our net income and cash flows and could have a material adverse effect on our financial condition.
These adverse conditions could continue to impact our net income, cash flows and liquidity and could have a material adverse effect on our financial condition and results of operations.
As of December 31, 2023, we had $58.3 million of cash and cash equivalents and $560.7 million of available borrowings under our unsecured credit facility, net of $39.3 million in letters of credit outstanding.
As of December 31, 2024, we had $90.2 million of cash and cash equivalents and $560.8 million of available borrowings under our unsecured credit facility, net of $39.2 million in letters of credit outstanding.
Funds from Operations (FFO) Pursuant to the revised definition of FFO adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), we calculate FFO by adjusting net income/(loss) attributable to common unit holders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable 45 consolidated real estate, impairment losses on investments in unconsolidated real estate ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated real estate ventures, real estate related depreciation and amortization, and after similar adjustments for unconsolidated real estate ventures.
Due to the uncertainty of specific actions we may undertake to minimize possible effects of market interest rate increases, this analysis assumes no changes in our financial structure. 48 Funds from Operations (FFO) Pursuant to the revised definition of FFO adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”), we calculate FFO by adjusting net income/(loss) attributable to common unit holders (computed in accordance with GAAP) for gains (or losses) from sales of properties, impairment losses on depreciable consolidated real estate, impairment losses on investments in unconsolidated real estate ventures driven by a measurable decrease in the fair value of depreciable real estate held by the unconsolidated real estate ventures, real estate related depreciation and amortization, and after similar adjustments for unconsolidated real estate ventures.
Additionally, we will be required to pay these certain former owners an amount estimated at approximately $0.6 million to redeem their residual interest in the fee owner of this property.
Additionally, we will be required to pay these certain former owners an amount estimated at approximately 47 $0.6 million to redeem their residual interest in the fee owner of this property. The $0.6 million payment is included within “Other liabilities” on the consolidated balance sheets.
In addition, approximately 96% of our leases (as a proportion of our wholly-owned portfolio square feet) contain effective annual rent escalations that are either fixed (generally ranging from 2.5% to 3.0%) or indexed based on a consumer price index or other indices.
In addition, as of December 31, 2024, approximately 96% of our leases (as a percentage of the aggregate net rentable square feet of our wholly-owned portfolio) contain annual rent escalations that are either fixed (generally ranging from 2.0% to 3.0% per lease year) or indexed based on a consumer price index or other indices.
The Parent Company unconditionally guarantees the Operating Partnership’s unsecured debt obligations, which, as of December 31, 2023, amounted to $1,888.6 million. The Operating Partnership’s secured debt obligations as of December 31, 2023 amounted to $258.8 million.
The Parent Company unconditionally guarantees the Operating Partnership’s unsecured debt obligations, which, as of December 31, 2024, amounted to $1,948.6 million. The Operating Partnership’s secured debt obligations as of December 31, 2024 amounted to $277.7 million.
We believe that the quality of our assets and the strength of our balance sheet will enable us to raise capital, if necessary, in various forms and from different sources, including through secured or unsecured loans from banks, pension funds and life insurance companies.
We also believe that our portfolio and liquidity profile will enable us to raise capital, as necessary, in various forms and from different sources, including through secured or unsecured loans from banks, pension funds and life insurance companies.
During the year ended December 31, 2023, when compared to the year ended December 31, 2022, the change in investing cash flows was due to the following activities (in thousands): (Decrease) Increase Acquisitions of real estate $ (4,301) Capital expenditures and capitalized interest 106,554 Capital improvements/acquisition deposits/leasing costs 26,732 Joint venture investments (38,494) Proceeds from the sale of properties 12,594 Proceeds from note receivable (44,300) Capital distributions from unconsolidated real estate ventures (43,108) Decrease in net cash used in investing activities $ 15,677 We generally fund our investment activity through the sale of real estate, property-level financing, credit facilities, senior unsecured notes, and construction loans.
During the year ended December 31, 2024, when compared to the year ended December 31, 2023, the change in investing cash flows was due to the following activities (in thousands): (Decrease) Increase Acquisitions of real estate $ 7,747 Capital expenditures and capitalized interest 26,700 Capital improvements/acquisition deposits/leasing costs (3,481) Joint venture investments (108,105) Proceeds from the sale of properties 79,063 Capital distributions from unconsolidated real estate ventures 52,803 Decrease in net cash used in investing activities $ 54,727 We generally fund our investment activity through the sale of real estate, property-level financing, credit facilities, senior unsecured notes, and construction loans.
During the year ended December 31, 2023, when compared to the year ended December 31, 2022, the change in financing cash flows was due to the following activities (in thousands): (Decrease) Increase Proceeds from debt obligations $ (284,176) Repayments of debt obligations 340,970 Redemption of limited partnership units 4,001 Debt financing costs paid 5,504 Dividends and distributions paid 6,548 Other financing activities 2,570 Increase in net cash provided by financing activities $ 75,417 42 Capitalization Indebtedness The table below summarizes indebtedness under our unsecured debt at December 31, 2023 and December 31, 2022: December 31, 2023 December 31, 2022 (dollars in thousands) Balance: (a) Fixed rate $ 1,985,000 $ 1,554,301 Variable rate - unhedged (b) (c) 162,434 417,110 Total $ 2,147,434 $ 1,971,411 Percent of Total Debt: Fixed rate 92.4 % 78.8 % Variable rate - unhedged 7.6 % 21.2 % Total 100.0 % 100.0 % Weighted-average interest rate at period end: Fixed rate 5.1 % 4.9 % Variable rate - unhedged 7.1 % 5.6 % Total 5.2 % 5.0 % Weighted-average maturity in years: Fixed rate 3.8 4.6 Variable rate - unhedged 6.3 5.9 Total 4.0 4.8 (a) Consists of unpaid principal and does not reflect premium/discount or deferred financing costs.
During the year ended December 31, 2024, when compared to the year ended December 31, 2023, the change in financing cash flows was due to the following activities (in thousands): (Decrease) Increase Proceeds from debt obligations $ 76,087 Repayments of debt obligations (172,395) Redemption of limited partnership units 5 Debt financing costs paid (1,963) Dividends and distributions paid 19,840 Other financing activities (657) Increase in net cash used in financing activities $ (79,083) 45 Capitalization Indebtedness The table below summarizes indebtedness under our unsecured debt at December 31, 2024 and December 31, 2023: December 31, 2024 December 31, 2023 (dollars in thousands) Balance: (a) Fixed rate $ 2,123,610 $ 1,985,000 Variable rate - unhedged (b) (c) 102,734 162,434 Total $ 2,226,344 $ 2,147,434 Percent of Total Debt: Fixed rate 95.4 % 92.4 % Variable rate - unhedged 4.6 % 7.6 % Total 100.0 % 100.0 % Weighted-average interest rate at period end: Fixed rate 6.2 % 5.1 % Variable rate - unhedged 6.5 % 7.1 % Total 6.2 % 5.2 % Weighted-average maturity in years: Fixed rate 3.8 3.8 Variable rate - unhedged 0.6 6.3 Total 3.7 4.0 (a) Consists of unpaid principal and does not reflect premium/discount or deferred financing costs.
The following table presents a reconciliation of net income attributable to common unitholders to FFO for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (amounts in thousands, except share information) Net income (loss) attributable to common unitholders $ (197,948) $ 53,538 Add (deduct): Amount allocated to unvested restricted unitholders 567 456 Net gain on real estate venture transactions (181) (26,718) Net gain on disposition of real estate (7,736) (17,677) Provision for impairment 131,573 4,663 Company's share of impairment of an unconsolidated real estate venture 37,175 — Depreciation and amortization: Real property 159,213 149,026 Leasing costs including acquired intangibles 26,131 25,989 Company’s share of unconsolidated real estate ventures 50,565 49,743 Partners’ share of consolidated real estate ventures (20) (18) Funds from operations $ 199,339 $ 239,002 Funds from operations allocable to unvested restricted shareholders (1,043) (770) Funds from operations available to common share and unit holders (FFO) $ 198,296 $ 238,232 Weighted-average shares/units outstanding — basic (a) 172,475,645 172,036,481 Weighted-average shares/units outstanding — fully diluted (a) 173,046,299 172,870,758 (a) Includes common shares and partnership units outstanding through the years ended December 31, 2023 and December 31, 2022, respectively.
The following table presents a reconciliation of net income attributable to common unitholders to FFO for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (amounts in thousands, except share information) Net loss attributable to common unitholders $ (197,670) $ (197,948) Add (deduct): Amount allocated to unvested restricted unitholders 1,178 567 Net gain on real estate venture transactions (63,696) (181) Net gain on disposition of real estate (2,297) (7,736) Provision for impairment 44,101 131,573 Company's share of impairment of an unconsolidated real estate venture 147,184 37,175 Depreciation and amortization: Real property 154,945 159,213 Leasing costs including acquired intangibles 19,746 26,131 Company’s share of unconsolidated real estate ventures 47,013 50,565 Partners’ share of consolidated real estate ventures (9) (20) Funds from operations $ 150,495 $ 199,339 Funds from operations allocable to unvested restricted shareholders (1,624) (1,043) Funds from operations available to common share and unit holders (FFO) $ 148,871 $ 198,296 Weighted-average shares/units outstanding — basic (a) 173,042,591 172,475,645 Weighted-average shares/units outstanding — fully diluted (a) 175,969,844 173,046,299 (a) Includes common shares and partnership units outstanding through the years ended December 31, 2024 and December 31, 2023, respectively.
(b) Debt financing amount represents an estimate at 55% Loan-to-Value ratio for 3151 Market Street.. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
Occupancy at our Core Properties at December 31, 2023 was 88.0% compared to 89.8% at December 31, 2022. 30 The table below summarizes selected operating and leasing statistics of our wholly owned properties for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Leasing Activity Core Properties (1): Total net rentable square feet owned 12,698,115 12,791,041 Occupancy percentage (end of period) 88.0 % 89.8 % Average occupancy percentage 88.9 % 89.8 % Total Portfolio, less properties in development/redevelopment (2): Tenant retention rate (3) 49.3 % 64.1 % New leases and expansions commenced (square feet) 342,731 811,316 Leases renewed (square feet) 423,998 847,454 Net absorption (square feet) (298,896) (171,208) Percentage change in rental rates per square foot (4): New and expansion rental rates 22.2 % 24.9 % Renewal rental rates 10.9 % 15.5 % Combined rental rates 13.5 % 18.7 % Weighted average lease term for leases commenced (years) 6.2 6.8 Capital Costs Committed (5): Leasing commissions (per square foot) $ 7.65 $ 9.69 Tenant Improvements (per square foot) $ 14.11 $ 30.77 Total capital per square foot per lease year $ 3.23 $ 4.26 (1) Does not include properties under development, redevelopment, held for sale, or sold.
Occupancy at our Core Properties at December 31, 2024 was 87.8% compared to 88.0% at December 31, 2023. 32 The table below summarizes selected operating and leasing statistics of our wholly owned properties for the years ended December 31, 2024 and 2023: Three Months Ended December 31, Year Ended December 31, 2024 2023 2024 2023 Leasing Activity Core Properties (1)(2): Total net rentable square feet owned 11,930,549 12,698,115 11,930,549 12,698,115 Occupancy percentage (end of period) 87.8 % 88.0 % 87.8 % 88.0 % Average occupancy percentage 87.4 % 88.0 % 88.3 % 88.9 % Total Portfolio, less properties in development/redevelopment: Tenant retention rate (3) 75.6 % 44.7 % 63.0 % 49.3 % New leases and expansions commenced (square feet) 97,657 123,515 425,604 342,731 Leases renewed (square feet) 100,776 85,620 597,808 423,998 Net absorption (square feet) 32,455 (62,512) (128,494) (298,896) Percentage change in rental rates per square foot (4): New and expansion rental rates 8.0 % 24.6 % 17.8 % 22.2 % Renewal rental rates 5.4 % 5.9 % 11.3 % 10.9 % Combined rental rates 5.9 % 13.4 % 12.6 % 13.5 % Weighted average lease term for leases commenced (years) 6.4 4.9 6.2 6.2 Average annual rent (per square foot) (6) (7) $ 40.07 $ 36.54 $ 40.08 $ 37.25 Capital Costs Committed (5)(6): Leasing commissions (per square foot) $ 5.56 $ 5.63 $ 7.77 $ 7.65 Tenant improvements (per square foot) $ 12.32 $ 11.30 $ 21.19 $ 14.11 Total capital per square foot per lease year $ 3.07 $ 3.10 $ 3.88 $ 3.23 Average annualized capital as % of average annual rent (6) (7) 8.9 % 10.8 % 12.0 % 10.0 % (1) Does not include properties under development, redevelopment, held for sale, or sold.
Total Revenue Rents from the Total Portfolio increased $8.9 million primarily as a result of the following: • $18.0 million increase related to our Recently Completed/Acquired Properties which comprise 405 Colorado, Austin TX, 250 King of Prussia Road, Radnor, PA and 2340 Dulles Corner Boulevard, Herndon VA; • $7.3 million decrease due to the sales of 8521 Leesburg Pike, Vienna, VA in the fourth quarter of 2023, T hree Barton Skyway, Austin, TX in the third quarter of 2023 and 200 Barr Harbor Drive in the fourth quarter of 2022; and • $3.2 million decrease due to the early termination of a single tenant occupant at a property in our Austin, Texas segment in the third quarter of 2023 and removing one building from service in our Philadelphia CBD segment in the third quarter of 2022.
Total Revenue Rents from the Total Portfolio decreased $(10.6) million primarily as a result of the following: • $6.6 million decrease due to the sales of 200 North Radnor Chester Road, Radnor, PA and 8521 Leesburg Pike, Vienna, VA in the fourth quarter of 2023 and T hree Barton Skyway, Austin, TX in the third quarter of 2023; • $3.3 million decrease due to the sale of five Class B office properties in the Plymouth Meeting Executive Center in Plymouth Meeting, PA in the third quarter of 2024; • $2.5 million decrease due to the early termination of a single tenant occupant at a property in our Austin, Texas segment in the third quarter of 2023; and • $7.3 million increase relate Recently Completed/Acquired Properties which comprise 250 King of Prussia Road, Radnor, PA, 155 King of Prussia Road, Radnor, PA and 2340 Dulles Corner Boulevard, Herndon VA.
We have committed to contribute $15.0 million to a newly-formed venture capital fund that invests in early-stage life science companies.
We have committed to contribute $15.0 million to a newly-formed venture capital fund that invests in early-stage life science companies. As of December 31, 2024 we had funded $2.7 million of the foregoing commitment.
The $0.6 million payment is included within “Other liabilities” on the consolidated balance sheets. 44 As part of our acquisition of properties, from time to time in tax-deferred transactions, we have agreed to provide certain of the prior owners of the acquired properties the right to guarantee our indebtedness.
As part of our acquisition of properties, from time to time in tax-deferred transactions, we have agreed to provide certain of the prior owners of the acquired properties the right to guarantee our indebtedness.
We used the net proceeds from the Secured Facility for general corporate purposes, including to reduce outstanding borrowings under our unsecured credit facility. See Note 9 “Debt Obligations,” for further information. On March 1, 2023, we closed on an unsecured term loan with a principal amount of $70.0 million (the “Unsecured Term Loan”).
See Note 8 “Debt Obligations,” for further information. On March 1, 2023, we closed on an unsecured term loan with a principal amount of $70.0 million (the “Unsecured Term Loan”).
The Construction Loan has a scheduled maturity date of August 16, 2026 with an option to prepay at any time without a fee, premium or penalty. The Construction Loan bears interest at SOFR plus 2.5%.
The Construction Loan has a scheduled maturity date of August 16, 2026 with an option to prepay at any time without a fee, premium or penalty. The Construction Loan bears interest at SOFR plus 2.5%. On April 12, 2024, we completed an underwritten offering of $400.0 million aggregate principal amount of our 8.875% Guaranteed Notes due 2029 (the “2029 Notes”).
Depreciation and Amortization Depreciation and amortization expense increased primarily as a result of the following: • $7.3 million increase due to the placement into service of our Recently Completed/Acquired Properties; and • $2.6 million increase related to accelerated depreciation on the tenant improvements due to the early termination of a single tenant occupant at a property in our Austin, Texas segment; Provision for Impairment During the fourth quarter of 2023, we recognized a provision for impairment of $103.2 million on three properties in the Metropolitan Washington, D.C. area within our Other segment.
The remaining $5.5 million decrease in Rents is primarily due to increase vacancies across our Same Store Property Portfolio. 39 Depreciation and Amortization Depreciation and amortization expense decreased primarily as a result of the following: • $5.6 million decrease related to the reduction in the cost basis of assets as a result of the provision for impairment recorded on two properties in the Metropolitan Washington, D.C. area within our Other segment in 2023; • $4.0 million decrease related to accelerated depreciation on tenant improvements due to the early termination of a single tenant occupant at a property in our Austin, Texas segment in 2023; • $2.9 million decrease related to the sales of three properties in 2023; • $2.0 million decrease due to the sale of five Class B office properties in the Plymouth Meeting Executive Center in Plymouth Meeting, PA in the third quarter of 2024; and • $3.0 million increase due to the placement into service of our Recently Completed/Acquired Properties.
On January 20, 2023, we completed the redemption of the remaining $54.3 million aggregate principal amount of the 2023 Notes. On January 19, 2023, we closed on a term loan secured by seven operating properties with an aggregate principal amount of $245.0 million (the “Secured Facility”). The Secured Facility matures on February 6, 2028.
On January 19, 2023, we closed on a term loan secured by seven operating properties with an aggregate principal amount of $245.0 million (the “Secured Facility”). The Secured Facility matures on February 6, 2028. We used the net proceeds from the Secured Facility for general corporate purposes, including to reduce outstanding borrowings under our unsecured credit facility.
The following table summarizes changes in our cash flows (in thousands): Year Ended December 31, Activity 2023 2022 (Decrease) Increase Operating $ 177,273 $ 209,307 $ (32,034) Investing (174,912) (190,589) 15,677 Financing 46,786 (28,631) 75,417 Net cash flows $ 49,147 $ (9,913) $ 59,060 Our principal source of cash flows is from the operation of our Properties.
The following table summarizes changes in our cash flows (in thousands): Year Ended December 31, Activity 2024 2023 (Decrease) Increase Operating $ 181,125 $ 177,273 $ 3,852 Investing (120,185) (174,912) 54,727 Financing (32,297) 46,786 (79,083) Net cash flows $ 28,643 $ 49,147 $ (20,504) Our principal source of cash flows is from the leasing of space at our Properties.
(2) Includes leasing related to completed developments and redevelopments, recently completed not yet stabilized, and sold properties. (3) Calculated as percentage of total square feet. (4) Includes base rent plus reimbursement for operating expenses and real estate taxes. (5) Calculated on a weighted average basis.
(2) Includes leasing at recently completed not-stabilized Properties. The statistics presented for periods ended prior to the three-month period ended December 31, 2024 have not been adjusted for properties sold subsequent to the periods presented. (3) Calculated as percentage of total square feet. (4) Includes base rent plus reimbursement for operating expenses and real estate taxes.
As of December 31, 2023, our senior unsecured credit ratings and outlook were as follows: Moody's S&P Long-term debt Ba1 BBB- Outlook Negative Negative Subsequent to December 31, 2023, S&P downgraded our senior unsecured credit rating from BBB- to BB+. As a result of the downgrade, the interest rate will increase 25 basis points to 8.05% in March 2024.
During the first quarter of 2024, S&P downgraded our senior unsecured credit rating from BBB- to BB+. As a result of the downgrade, the interest rate on the 2028 Notes increased 25 basis points to 8.05% in March 2024 due to the coupon adjustment provisions within the 2028 Notes.
Contractual Obligations We provide customary guarantees for certain development projects of our unconsolidated real estate ventures. See Note 20 “Commitments and Contingencies, ” to our Consolidated Financial Statements for further details on payment guarantees provided on the behalf of real estate ventures.
See Note 19 “Commitments and Contingencies, ” to our Consolidated Financial Statements for further details on payment guarantees provided on the behalf of real estate ventures. In connection with the Schuylkill Yards Project, we entered into a neighborhood engagement program and, as of December 31, 2024, had $5.2 million of future contractual obligations.
If our credit ratings are lowered further, our ability to access the public debt markets, our costs of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit ratings agencies reviews its ratings periodically and there is no guarantee our current credit ratings will remain the same.
As of December 31, 2024, our senior unsecured credit ratings and outlook were as follows: Moody's S&P Long-term debt Ba2 BB+ Outlook Stable Negative If our credit ratings are lowered further, our ability to access the public debt markets, our costs of funds, and other terms for new debt issuances could be adversely impacted.

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