Brandywine Realty Trust Prices $400 Million of 8.875% Guaranteed Notes Due 2029
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Insights
The pricing of Brandywine Realty Trust's $400 million guaranteed notes at an interest rate of 8.875% is a strategic move to refinance existing debt. The interest rate is notably higher than the 4.10% rate of the notes due for redemption, which suggests that the current market conditions are less favorable, potentially due to rising interest rates or perceived higher risk. This decision will impact the company's interest expenses and it's essential to assess whether the increase in cost is offset by the benefits of extending the debt maturity profile.
Investors should be aware that the re-offer yield of 9.000% indicates the yield to which the notes were sold to the initial purchasers. The slight discount at which the notes are offered (99.505%) could be attractive to investors seeking higher yields in a potentially volatile interest rate environment. However, it also reflects the required compensation for investors taking on the credit risk associated with Brandywine's notes.
The use of proceeds to retire higher-cost debt before maturity could be a positive sign of proactive balance sheet management. However, it's important to monitor how this refinancing will affect the company's leverage ratios and overall financial flexibility, especially in the context of its general corporate purposes.
Brandywine's decision to enter the debt market with a public offering of guaranteed notes is indicative of their capital structure strategy. The timing of the market entry could be influenced by expectations of future interest rate movements or credit market conditions. The company's choice of joint book-running managers, including top-tier investment banks, suggests a strong underwriting process and potentially broad distribution of the debt offering.
The structure of the offering, including the use of senior co-managers and co-managers, may enhance distribution capabilities and diversify the investor base. The involvement of multiple underwriting firms also suggests that Brandywine is seeking to minimize concentration risk and ensure the success of the offering through a syndicate approach.
From a market dynamics perspective, the offering provides insights into investor appetite for corporate debt with similar credit profiles. The outcome of this offering could serve as a benchmark for other real estate investment trusts (REITs) considering debt financing. It's important to analyze post-issuance trading performance to gauge market reception and liquidity of the notes.
As a real estate investment trust, Brandywine's operational performance is closely tied to the health of the real estate market, particularly in the commercial sector. The issuance of 8.875% guaranteed notes may reflect an adjustment to the company's capital in response to real estate market trends, such as shifts in occupancy rates, rental income stability and property valuation changes.
Investors should consider the impact of this capital raise on the company's ability to invest in property acquisitions, development projects, or capital improvements. These activities are essential for growth and competitiveness in the REIT sector. The shift in capital structure and the potential increase in interest expense must be weighed against the strategic advantages that the new capital provides.
Furthermore, the move to redeem the existing 4.10% Guaranteed Notes could be a signal of changing market conditions that may affect other REITs. If Brandywine's action is part of a broader trend among REITs to lock in longer-term financing in anticipation of a rising rate environment, it could have implications for the sector's cost of capital and investment strategies going forward.
PHILADELPHIA, April 04, 2024 (GLOBE NEWSWIRE) -- Brandywine Realty Trust (the “Company”) (NYSE: BDN) announced today that its operating partnership, Brandywine Operating Partnership, L.P. (the “Operating Partnership”), has priced an underwritten public offering of
The Notes are being offered to investors at a price of
The net proceeds of the offering, after deducting underwriting discounts and estimated transaction expenses related to this offering, are expected to be approximately
The joint book-running managers for the offering are BofA Securities, Inc., Citigroup Global Markets Inc., BNY Mellon Capital Markets, LLC, PNC Capital Markets LLC, Truist Securities, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC. The senior co-managers for the offering are Citizens JMP Securities, LLC, M&T Securities, Inc. and TD Securities (USA) LLC. The co-managers for the offering are Samuel A. Ramirez & Company, Inc. and Synovus Securities, Inc.
This offering is being made pursuant to an effective shelf registration statement and related prospectus and preliminary prospectus supplement filed by the Company with the Securities and Exchange Commission. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor will there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Copies of the prospectus supplement and prospectus relating to the offering may be obtained from BofA Securities, Inc., Attn: Prospectus Department, 201 North Tryon Street, NC1-022-02-25, Charlotte, NC 28255-0001 or by email at dg.prospectus_requests@bofa.com or by calling toll-free 1-800-294-1322; and Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, telephone: 1-800-831-9146 or e-mail: prospectus@citi.com.
About Brandywine Realty Trust
Brandywine Realty Trust (NYSE: BDN) is one of the largest, publicly traded, full-service, integrated real estate companies in the United States with a core focus in the Philadelphia and Austin markets. Organized as a real estate investment trust (REIT), we own, develop, lease and manage an urban, town center and transit-oriented portfolio comprising 158 properties and 22.4 million square feet as of December 31, 2023, which excludes assets held for sale. Our purpose is to shape, connect and inspire the world around us through our expertise, the relationships we foster, the communities in which we live and work, and the history we build together. For more information, please visit www.brandywinerealty.com.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “will,” “strategy,” “expects,” “seeks,” “believes,” “potential,” or other similar words. Because such statements involve known and unknown risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and not within our control. Such risks, uncertainties and contingencies include, among others: risks related to the impact of potential future outbreaks of infectious diseases on our financial condition; results of operations and cash flows and those of our tenants as well as on the economy and real estate and financial markets; reduced demand for office space and pricing pressures, including from competitors, that could limit our ability to lease space or set rents at expected levels or that could lead to declines in rent; uncertainty and volatility in capital and credit markets, including changes that reduce availability, and increase costs, of capital; the effect of inflation and interest rate fluctuations, including on the costs of our planned debt refinancing; the potential loss or bankruptcy of tenants or the inability of tenants to meet their rent and other lease obligations; risks of acquisitions and dispositions, including unexpected liabilities and integration costs; delays in completing, and cost overruns incurred in connection with, our developments and redevelopments; disagreements with joint venture partners; unanticipated operating and capital costs; uninsured casualty losses and our ability to obtain adequate insurance, including coverage for terrorist acts; additional asset impairments; our dependence upon certain geographic markets; changes in governmental regulations, tax laws and rates and similar matters; unexpected costs of REIT qualification compliance; and costs and disruptions as the result of a cybersecurity incident or other technology disruption. The declaration and payment of future dividends (both timing and amount) is subject to the determination of our Board of Trustees, in its sole discretion, after considering various factors, including our financial condition, historical and forecast operating results, and available cash flow, as well as any applicable laws and contractual covenants and any other relevant factors. Our Board’s practice regarding declaration of dividends may be modified at any time and from time to time. Additional information on factors which could impact us, and the forward-looking statements contained herein are included in our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2023. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events except as required by law.
Company / Investor Contact:
Tom Wirth
EVP & CFO
610-832-7434
tom.wirth@bdnreit.com
FAQ
What is the purpose of Brandywine Realty Trust's (BDN) $400 million public offering of 8.875% guaranteed notes due 2029?
When will the interest on the Notes be payable?
What is the underwritten public offering price of the Notes?
Who are the joint book-running managers for the offering?
What is the expected closing date of the sale of the Notes?
How can one obtain copies of the prospectus supplement and prospectus relating to the offering?
