Brandywine Realty 'cautious' on 2008 outlook
The troubles of the housing market get a daily airing on the news, but the office and industrial sides are feeling the pinch too.
Brandywine Realty Trust, of Radnor, issued its year-end financial results last week, just a couple of weeks after the resignation of two members of the real estate firm’s board.
The 2007 numbers were in line with expectations, but several analysts have expressed concerns that the company’s acquisition of Prentiss Properties in 2006 has not delivered for shareholders.
Last week’s analyst call focused primarily on what Brandywine executives are seeing in the current real estate environment and what president and CEO Gerry Sweeney called their “somewhat more cautious view on the economy.”
“We are in a type of market where, frankly, everything is for sale and nothing is for sale,” he said. “… I view 2008 as a year to strictly focus on operational execution, balance-sheet strengthening and our leasing activities.”
That means no acquisitions and no “development activity unless accompanied by both significant pre-leasing and improved financial capacity,” Sweeney told analysts, according to a transcript of the call posted by Seeking Alpha.
However, that does not mean that Brandywine is backing away from its ambitious rehabilitation of the 30th Street Post Office in West Philadelphia for the IRS. Part of the Cira Centre South project, the post office redevelopment will cost $290 million, and Brandywine has been talking with possible joint venture partners who would take “a major equity stake” in it.
Sweeney also addressed the resignations of Thomas F. August and Michael V. Prentiss. The resignation letter of August, which was filed with the Securities and Exchange Commission, was particularly candid, expressing frustration with the status quo and outlining how to change the management structure.
According to Sweeney, August’s letter was sent as an internal e-mail and under SEC rules it had to be filed as part of his resignation. “We all regret this had to be included as it portrayed a different picture than the process that was truly underway,” Sweeney said.
“Simply put, we all care very much about the success of the company, and sometimes that creates emotional reactions,” he said.