Brandywine Realty Trust (NYSE:BDN) reported fourth-quarter results that management said were in line with its business plan, while outlining a 2026 strategy centered on returning to earnings growth, accelerating asset sales to reduce leverage, and continuing to stabilize its remaining development projects.
Operating performance and leasing trends
CEO Jerry Sweeney said 2025 produced results “very much in line with our business plan,” citing what he characterized as strong operating metrics and continued “flight to quality” among tenants. The company’s wholly owned core portfolio ended the year at 88.3% occupied and 90.4% leased. Forward leasing commencing after year-end increased 26% to 229,000 square feet, with most expected to take occupancy in the next two quarters.
Sweeney noted that leasing capital for 2025 was 9.5%, which he said was the lowest range in five years, attributing the result to capital control, purchasing power, and a high percentage of renewals. On mark-to-market metrics, the company reported an annual GAAP mark-to-market of 4.2%, exceeding expectations, while cash mark-to-market was in line with the plan. New leasing mark-to-market was 13% on a GAAP basis and 4% on a cash basis, according to Sweeney.
Management also highlighted increased tour activity. Fourth-quarter tour volume exceeded the third quarter by 13% and was up 87% versus the fourth quarter of 2024. Sweeney said that on a wholly owned basis, 45% of new leasing in the fourth quarter was driven by flight-to-quality demand. For 2025, physical tour volume increased 20% year over year, and 45% on a square-footage basis. The company reported that 56% of tours converted to a proposal and 38% of proposals converted to an executed lease, which management said was in line with historical averages.
Market commentary: Philadelphia strength and Austin drag
In Philadelphia—Brandywine’s largest submarket, including the CBD and University City—Sweeney said the portfolio was 95% occupied and 97% leased, with only 6% of space rolling through 2028. The Commerce Square joint venture was reported at 90% leased, bringing combined Philadelphia holdings (wholly owned and joint venture) to 95%.
Sweeney cited market-share gains in Market West and University City, saying Brandywine captured 30% of new leasing signed over the last five years and 54% of new leasing signed in those markets during 2025. He also said net effective rents in those submarkets have increased nearly 20% since 2021.
In the Pennsylvania suburbs, Brandywine reported 89.4% leased overall and 91% leased in Radnor, with a “solid” pipeline for existing vacancies. Austin remained a weaker spot: at 74% occupancy, it created what Sweeney described as a 400 basis point drag on overall company leasing levels. Still, he said Austin tour volume was up more than 100% year over year, which he characterized as a sign of a slow recovery.
Liquidity, leverage, and balance sheet actions
Brandywine ended the quarter with $32 million of cash and no outstanding balance on its $600 million unsecured line of credit. Sweeney noted the company has no unsecured bond maturities until November 2027 and reiterated a goal of maintaining minimal revolver balances as it targets a return to investment-grade metrics.
CFO Tom Wirth said fourth-quarter debt service and interest coverage ratios were 1.8, below third-quarter levels. He also reported third-quarter annualized combined and core net debt to EBITDA of 8.8x and 8.4x, respectively, and said metrics were negatively impacted by preferred equity partner buyouts in the fourth quarter totaling $136 million.
During the quarter, the company redeemed preferred partner equity interests in both Schuylkill Yards joint ventures. The 3025 JFK property was brought onto Brandywine’s balance sheet, with a major tenant taking occupancy in early January; the office component is expected to be added to the core portfolio in the first quarter at 92% leased. Management said the buyout at 3151—about $65.7 million—was largely funded with a $50 million C-PACE loan, replacing higher-priced equity with a lower-priced loan that has prepayment flexibility.
Sweeney said these buyouts temporarily increased year-end leverage ahead of a planned 3025 construction loan refinancing and the company’s asset sales program. He added that pro forma for the 3025 revenue stream commencing in January, net debt to EBITDA would improve by 0.4 turns and fixed charge by 0.2 turns.
Fourth-quarter results and key drivers
Wirth reported a fourth-quarter net loss of $36.9 million, or $0.21 per share. Fourth-quarter FFO totaled $14.6 million, or $0.08 per diluted share, which management said was in line with consensus estimates. Both quarterly results included a one-time charge for the early extinguishment of a CMBS loan totaling $12.2 million, or about $0.07 per share.
Property-level NOI was $70 million, about $1 million below forecast, primarily due to increased operating costs, Wirth said. Unconsolidated joint ventures contributed $0.6 million of FFO, which was $1.4 million better than projected, driven by improved operations at Commerce Square, ATX Office, and Solaris. G&A ran $0.6 million below reforecast due to lower compensation expense, while net interest expense was $0.7 million higher, primarily due to the inclusion of the 3025 JFK loan, partially offset by higher capitalized interest.
2026 outlook: FFO growth, asset sales, refinancing, and project stabilization
Management provided 2026 FFO guidance of $0.51 to $0.59 per share, with a midpoint of $0.55. Sweeney said the midpoint implies 5.8% growth versus 2025 and does not include any benefit from potential recapitalizations of the Austin development joint ventures. Wirth also said 2026 guidance assumes a net loss of $0.62 per share at the midpoint.
Among the operating assumptions for 2026, management said:
- Spec revenue target of $17 million to $18 million, with the company “almost $13 million” completed at the midpoint at the time of the call.
- Year-end occupancy expected to improve by 120 basis points from 2025 levels, with positive net absorption projected for the first time in several years.
- GAAP mark-to-market expected at 5% to 7%, while cash mark-to-market is expected between -2% and 0%.
- Leasing capital expected at 12% to 13%, reflecting a higher mix of new leasing.
On capital markets and portfolio actions, Brandywine expects $280 million to $300 million of sales activity in 2026, with average cap rates around 8% and a majority of closings anticipated in the first half. Wirth said the company is anticipating $290 million of wholly owned sales activity at the midpoint. Sweeney emphasized that sale proceeds will be used first to reduce leverage, while also noting the company expects to be “opportunistic” with share repurchases given what he called a significantly undervalued stock price.
Wirth said the company plans to refinance the $178 million consolidated construction loan at 3025 JFK, which matures in July 2026, by late first quarter or early second quarter. He also said Brandywine is considering secured financing on the residential portion of the asset (about $100 million) to help unencumber the office component. The unsecured line of credit matures in June 2026, and management said it anticipates extending the facility ahead of maturity.
In Austin, the company expects to recapitalize One Uptown and Solaris in the second half of 2026 through transactions that could include a complete sale or a pari passu joint venture structure that reduces Brandywine to a minority ownership stake and generates cash to reduce leverage. Solaris was reported at 98% occupied and 99% leased, with renewals since Nov. 1 achieving an average 12.7% effective rent growth. One Uptown was reported at 55% leased, with an additional 20,000 square feet of leases out for execution that would bring the project to 63%.
Separately, Sweeney said Brandywine anticipates redeveloping a vacant Austin building of about 157,000 square feet, with estimated renovation costs of $30 million to $40 million over a three- to four-quarter period, targeting a cash yield above 8%.
To close the call, Sweeney noted that Executive Vice President of Operations George Johnstone has elected to retire and said the fourth-quarter call would be his last earnings call with the company.
About Brandywine Realty Trust (NYSE:BDN)
Brandywine Realty Trust (NYSE: BDN) is an internally managed real estate investment trust (REIT) specializing in the acquisition, development, and management of office and mixed-use properties. Headquartered in Radnor, Pennsylvania, the company focuses on creating high‐quality, transit‐oriented workplaces that meet evolving tenant demands for sustainability, technological connectivity, and flexible design. Brandywine’s portfolio emphasizes Class A office space, often integrated with retail, residential or hospitality components to foster vibrant, live‐work‐play environments.
Since its founding in 1994, Brandywine has executed a strategy of disciplined property investment and targeted development.
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