Brandywine widens 2026 loss forecast after $240 million Philadelphia sale

Brandywine Realty Trust reported a third-quarter net loss available to common shareholders of $22.3 million, or $0.13 per diluted share, and deepened its 2026 loss forecast, which it tied to a $240 million Philadelphia property sale and the cost of retiring debt early. Core FFO, which excludes the $15.4 million extinguishment charge, was $24.6 million, or $0.14 per diluted share, down from $28.0 million, or $0.16 a share, a year earlier.

Brandywine Realty Trust now expects a 2026 loss of $0.64 to $0.62 per diluted share, against the $0.45 to $0.41 it guided to previously. The company also replaced its FFO guidance of $0.53 to $0.57 with a Core FFO range of $0.54 to $0.56 that excludes the extinguishment charge. The release attributes the loss revision to the Philadelphia sale and to “the loss on the early extinguishment of debt recorded in the third quarter.”

Core FFO holds its midpoint while FFO guidance falls

The bridge explains the divergence. Starting from the loss range, Brandywine adds $1.18 of real estate depreciation and amortization, removes $0.32 of net disposition gains and adds $0.23 of impairments to reach FFO of $0.45 to $0.47. Adding the $0.09 extinguishment charge produces the $0.54 to $0.56 Core FFO range. The two midpoints sit on different measures: Core FFO's $0.55 matches the midpoint of the $0.53 to $0.57 FFO range Brandywine guided to previously, but FFO per diluted share itself is now $0.45 to $0.47, a $0.46 midpoint that is $0.09 lower, because FFO — unlike Core FFO — still carries the extinguishment charge. The reported loss also carries two one-time items larger than the loss itself: a $29.1 million non-cash impairment charge, or $0.17 a share, and $55.7 million of net gains on real estate dispositions, or $0.32 a share.

That distinction carries weight for a landlord valued on FFO rather than reported earnings. The same Philadelphia sale that deepened the loss also removed a building that was 3.9% occupied and paid down debt.

Sales ran ahead of plan and paid for the buyback

Sweeney said the capital markets plan is “completed” with “$681 million of sales versus our $305 million business plan target”. The quarter's disposals included the $240.0 million Philadelphia property, $151.0 million of Austin office space, $97.1 million across two McLean, Virginia buildings and $41.5 million in King of Prussia, Pennsylvania. The $136.0 million Solaris apartment sale was a venture in which Brandywine owned 57% and received $16.3 million of net proceeds after repaying a $76.5 million construction loan and its preferred partner.

Proceeds went to the balance sheet. Combined debt fell $390 million in the third quarter, including $140 million of 2028 and 2029 notes repurchased at a weighted-average rate of 8.67%, and the company bought back 4.7 million common shares at an average $3.19 for $14.9 million, cutting dividend payments by roughly $1.5 million a year. Sweeney said “Our leverage metrics have continued to improve including our Net Debt/EBITDA which was 7.6x at the end of the quarter compared to 9.0x in the previous quarter.” Core FFO of $24.6 million for the quarter was a 12.4% decline from a year earlier.

Occupancy holds at 89.0% while property costs climb

Total revenue rose 3.5% to $125.64 million from $121.42 million, with rents of $118.66 million. Property operating expenses were 24.9% higher at $39.23 million, against $31.41 million a year earlier, and interest expense was 18.6% higher at $39.04 million versus $32.91 million a year earlier even as debt was being repaid. The release does not break out either increase.

The core portfolio was 89.0% occupied and 90.5% leased across 58 properties and 10.8 million square feet, with the leased percentage reflecting new leases commencing after September 30, 2026. Brandywine signed 372,000 square feet of leases in the quarter, or 558,000 square feet including joint ventures, retained 50% of expiring tenants, and reported rental-rate mark-to-market of 10.8% on an accrual basis and 5.7% on a cash basis. Same-store NOI for the 55-property pool, excluding termination fees, bad debt and other items, was a 0.6% decline on an accrual basis. Cash-basis same-store NOI was 1.7% higher than a year earlier.

The revolver is repaid and $176 million is left

The September 30 balance sheet shows $313 million of cash, a $137 million balance on the $600 million unsecured revolver and $1.93 billion of senior notes, net. Sweeney said in the release that after the quarter's closings the company held $176 million of cash with no outstanding balance on the same $600 million line. The two descriptions are the same balance sheet at two moments: $313 million of quarter-end cash less the $137 million revolver balance is $176 million, so the difference is the repayment of the line, which the release presents as completed without dating it explicitly.

The guidance also excludes future gains or losses on other dispositions, further capital markets activity, receivable write-offs and future impairment charges. Brandywine's third-quarter conference call was scheduled for 9:00 a.m. Eastern on October 22, and it expects to report fourth-quarter results on February 3, 2027, the next dated checkpoint for the outlook.