Thank you for standing by. Welcome to the Brandywine Realty Trust Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jerry Sweeney, President and CEO. Please go ahead. Tanya, thank you very much. Good morning, everyone, and thank you all for participating in our second quarter 2023 earnings call. On today's call with me are George Johnstone, our Executive Vice President of Operations, Dan Palazzo, our Senior Vice President and Chief Accounting Officer, and Tom Wirth, our Executive Vice President and Chief Financial Officer. Prior to beginning, certain information discussed during our call may constitute forward-looking statements within the meaning of the Federal Securities Law. Although we believe estimates reflected in these statements are based on reasonable assumptions, we cannot give assurances that the anticipated results will be achieved. For further information on facts that could impact our anticipated results, please reference our press release, as well as our most recent, annual and quarterly reports that we file with the SEC. During our prepared comments today, we'll review our second quarter results and progress on our 2023 business plan. Tom will then review second quarter financial results and frame out the key assumptions driving our 2023 guidance for the balance of the year. After that, Dan, George, Tom, and I are certainly available for any questions. Moving to our prepared comments. The second quarter saw continued leasing momentum throughout our portfolio. During the quarter, we executed 568,000 sq ft of leases, including 177,000 sq ft of new leases within our wholly owned portfolio. Our joint venture portfolio achieved a very strong 401,000 sq ft of lease executions, including 139,000 sq ft of new leases. The combined activity totaled 969,000 sq ft, as we showed on page one of our SIP, these are our highest combined leasing volumes for the past four quarters. The operating metrics were strong as well. For the second quarter, we posted rental rate mark-to-market of 17.6% on a GAAP basis and 5.8% on a GAAP basis. As we look at the balance of the year, our mark-to-market will vary by region, with CBD Philadelphia at a 17% cash and 30% GAAP rental rate increase. The PA suburbs will be a 2% cash positive and 9% GAAP positive. Our mark-to-markets in Austin, we anticipate being negative on both a cash and a GAAP basis, given the current market conditions. This quarter, we did have 18,000 sq ft of positive absorption. We currently stand at 89.4% occupied and 91.1% leased, based on the 224,000 sq ft we have afford lease commencements. More importantly, as we review our portfolio, our core markets of Philadelphia CBD, University City, the Pennsylvania suburbs, and Austin, which comprise about 94% of our NOI, are 91.2% occupied and 92.7% leased. During the quarter, both our GAAP and cash same store outperformed our business plan ranges. The second quarter capital costs were also in line with our business plan ranges. Tenant retention came in at 71%, above the top end of our full year forecast, but we are maintaining our existing range based on forecasted activity between 49%-51%. Spec revenue range remains $17 million-$19 million, with $16.1 million or 89% at the midpoint already achieved. The speculative revenue range represents approximately 1.1 million sq ft, of which 787,000 sq ft, or 72%, is already completed. Our operating platform is solid with a stable outlook. We have further reduced our forward rollover exposure through 2024 to an average of 6.6% and through 2026 to an average annual rate of 7.3%. We are definitely seeing a pickup in activity. Conversion to lease execution remains frustratingly slow, but overall velocity, the starting point to any leasing cycle, continues to improve. Several key points we'd like to highlight for you. One is the quality curve thesis remains intact as our physical tour volume has been very encouraging. Second quarter physical tours exceeded the first quarter by 5%, exceeded our 2022 quarterly average by 47%, and also exceeded pre-pandemic levels by a significant margin as well. On a wholly owned basis, during the second quarter, 118,000 sq ft of our new leasing activity, or 67% of those leases, were a result of the flight to quality. We also saw tenant expansions continue to outweigh tenant contractions during the quarter. I think as further evidence of the emerging market recovery, our total leasing portfolio is up 21% from last quarter and stands at 3.5 million sq ft. That excludes the 1.3 million sq ft we have in our joint venture pipeline, which is also up from last quarter by over 200,000 sq ft. The wholly owned pipeline is broken down between 1.3 million sq ft in our wholly owned operating portfolio and 2.2 million sq ft on our development projects, which again, like the joint venture pipeline, is up over 200,000 sq ft from last quarter. The 1.3 million sq ft existing portfolio pipeline includes approximately 160,000 sq ft in advanced stages of lease negotiations. In that pipeline, 31% of our operating portfolio in new deals are prospects looking to move up the quality curve. As we noted on page 1 of our supplemental package, we did receive notice during the quarter from the state of Texas that they had terminated their lease at our Uptown ATX campus effective August 31, 2023. The state currently occupies 100% of 1 of our buildings there that had an anticipated lease expiration date of October 26. The state has relocated their employees into a state-owned building. We are still assessing if that notice was provided in accordance with the requirements of the lease. While we continue to make that assessment, we determine if we are entitled to additional rent or remedies, we have conservatively assumed that we will not receive any rent after August and have removed that income from our FFO range. The overall impact of the early termination will be over $14 million in terms of reduction in total forecasted rent over the remaining lease term, and that includes about $1.5 million in 2023 and $4.4 million in 2024. In addition, we'll also need to write off approximately $370,000 in straight line rent over that 90-day period. To the extent that it is ultimately determined that that lease was effectively terminated, in accordance with our Uptown ATX master plan, we would plan on taking that building out of service, similar as we did to the 905 building, as it would not be available for any re-leasing activity consistent with our master plan development program. Turning to our EBITDA, our second quarter net debt to EBITDA increased to 7.6 times, which is up from 7.4 from the first quarter, primarily due to increased development spend of about $75 million. However, as occupancy and NOI increases during the balance of 2023, we anticipate this ratio will decrease to our business plan range, with asset sales taking place in the second half of the year and our targeted $100 million reduction in JV debt attribution also occurring by the end of the fourth quarter. As we did note in the SIP, this ratio has been higher due to development spend and debt attribution from joint ventures. Based upon our development pipeline investment at quarter end, we have $338 million of capital invested in $93 million of JV debt, generating really no meaningful NOI at this point. If we remove that investment from our 7.6 metric, our leverage would be 6.4 times, well within our core portfolio range. On the liquidity front, we also made solid progress on our, both our joint venture debt maturities and development financings during the quarter. In June, our Commerce Square joint venture closed a 5-year, $220 million secured financing with a 7.875% coupon, which replaced a $204 million mortgage loan. Given the state of the financing market, the rate was higher than we initially anticipated earlier in the year, but that loan has some flexibility that is open for prepayment after June of 2025, and it does provide additional proceeds to fund current and future leasing costs. In connection with that refinancing, we did make a $50 million contribution to the venture to both fund closing costs, redeem a portion of our preferred equity partner's equity interest, and pay down all accrued but unpaid partner preferred dividends to put that joint venture on very solid financial footing. Subsequent to quarter end, our MAP joint venture is finalizing a short-term extension on our $180 million loan from the current lender that we will take that maturity through October 1, 2023. That extension will provide additional time to work on a recapitalization strategy with both that leasehold lender and the fee owner of the properties. We are also in advanced discussions on a construction loan on our 155 King of Prussia Road project, and we anticipate that loan will close in August. On our other joint operating joint ventures, we do have $70 million of overall investment, with $620 million of non-recourse mortgages maturing next year before any extension options are exercised. Of that $620 million, about $112 million is attributable to Brandywine, as our ownership stake range between 15% and 20%. We are working very closely with all of our partners and our lenders on loan extensions and refinancing efforts, would expect to report additional progress on these non-recourse financings in the coming quarters. Currently, our consolidated debt is 93% fixed at 5.03%. We have no consolidated debt matures until October 2024 bond, $350 million bond. We also have no outstanding balance at the end of the quarter on our $600 million unsecured line of credit. We have approximately $32 million of unrestricted cash on our balance sheet. As we noted on page 13 of our SIP, based on our projected development spend, our business plan, after fully funding remaining development spend, all TI and leasing costs, we project, and Tom will amplify, that we will have full availability on that $600 million line of credit by year-end 2023. For the quarter, at our guidance midpoint, our $0.19 per share dividend represented per quarter dividend represented a 66% FFO payout ratio and an 84% CAD payout ratio. Another great quarter controlling capital spend. As such, as we noted in the SIP, we're changing our CAD range to 90%-100%, down from 95%-105%, we anticipate our coverage to be at the low end of the new range. As I'll talk about in a few moments, our business plan projects $125 million of sales that will generate some additional liquidity as well as some gains. Certainly, as our business plan progresses, the board will closely monitor capital market conditions, both company and market overall liquidity, sale activity progress, and our dividend payout levels as we assess the dividend going forward. Looking at our development pipeline, our wholly owned development pipeline aggregates $302 million of costs and is 30% life science and 70% office. These wholly owned developments are 83% leased, with the remaining funding requirement of $51 million, which is built into our capital plan. The majority of that spend is for tenant improvement and leasing commission costs that would only be spent attendant to lease executions. Our joint venture developments have a Brandywine share of $512 million. At full cost, this pipeline is 32% residential, 38% life science, and 30% office. As we noted in the SIP, higher interest costs than originally contemplated will impact our total costs. Based on the current SOFR curve, we currently estimate the cost increase due to higher rates will approximate $23 million. Based on the preferred structure of those joint venture developments, it's anticipated that Brandywine will likely be required to fund those additional costs, and we noted those increases on the development page in the SIP. Further, as I stated last quarter as well, stating the obvious, given the volatility in the capital markets, other than fully leased build-to-suit opportunities, future development starts are on hold, pending more leasing on our existing pipeline and more clarity on the cost of both debt capital and cap rates. Looking ahead, given the mixed-use nature of our master planned communities, primarily at Schuylkill Yards and Uptown ATX, as we identified on page 14 of the SIP, our expected forward product pipeline mix is 27% life science, 42% residential, 22% office, and 9% support retail, entertainment, and hospitality. As we identified back on page six of the SIP, our objective is to grow our life science platform to over 23% of our square footage based on land we currently own or control and approvals currently in place. Just a quick review of specific projects on page seven. 2340 Dulles Corner is 92% pre-leased with $23 million of remaining funding. 250 King of Prussia Road remains 53% leased, with $20 million of remaining funding. That 53% leased did not change quarter-over-quarter, we do have a strong pipeline of about 200,000 sq ft of deals in that pipeline, of which 100% of that pipeline is life science. Based upon that pipeline, we did slide the stabilization date of that project by one quarter. In addition, when you take a look at our overall pipeline development activity, that pipeline of our development projects is up 10% quarter-over-quarter, and as I mentioned earlier, stands at 2.2 million sq ft. Lease executions, even with the pipeline building, have been slow in coming. We have a number of leases in various stages of negotiation and are working hard to get them across the finish line. Giving this dynamic, we did slide the stabilization date on 3025 JFK by 1 quarter, and given the market conditions and pipeline activity in Austin, did slide the 1 Uptown office component by 2 quarters in their stabilization date. On 3025, to touch on that, we have a current active pipeline that's up slightly from last quarter for the life science and office components. We've done an amazing number of tours through the project. That tour activity continues. The delivery of the first block of residential units is underway this quarter, with a good level of activity since our marketing launch several weeks ago. Our 3151 life science project is under construction. Steel is up to the 5th level. We have a leasing pipeline there of almost 400,000 sq ft, and all systems are go there in terms of the number of hard hat tours we're doing as well. Turning to Austin, our Uptown ATX Block A construction from a construction standpoint is on time and on budget. On the office component, our leasing pipeline is at standard 721,000 sq ft, which is up 180,000 sq ft from last quarter. That pipeline includes a mix of prospects ranging from as low as 5,000 sq ft to as large as 200,000 sq ft. As that curtain wall in the building is going up and the lobby finishes are being completed, we're seeing an uptick in activity there as well. Our next phase of B+labs on the ninth floor of Cira Centre is well underway. This conversion to graduate lab space is now 66% leased. The full conversion will be completed in the first quarter of next year. The total costs, which are built into our capital plan, are $20 million, and we expect a return on cost there of 11%. Just a quick look at the sales market. There is no question that the sales market has been impacted by a challenging rate environment, a pullback by lenders on commercial real estate financings, particularly office, and negative macro overtones on the office sector itself. In spite of this, based on our pre-marketing efforts, we're still maintaining our $100 million-$125 million sale target. As we originally noted at the, when we announced our 2023 business plan, we did anticipate those sales occurring in the second half of the year. We do have about $200 million of properties in the market for sale now. Those properties are in our Met DC and Pennsylvania suburban markets. We also have several joint venture properties on the market at the same time as well. This quarter, we did gain certainty on the sale of an asset in Austin and expect that $53 million sale to close in the next several weeks. We have several other properties moving through contract negotiations, a couple of which may necessitate some level of short-term seller financing. In general, we continue to see a good list of bidders, the primary challenge being getting acquisition financing at both a cost and a loan-to-value range that makes sense for the buyer, but we continue to work with our buyers and their potential lenders to try and come up with a good solution. We do plan to continue to sell non-core land parcels during the balance of the year. On the joint venture front, as I alluded to earlier, about 20% of our total debt is coming from our JVs through debt attribution. We do plan to recapitalize several of these JVs during the second half of 2023, with the goal to reduce our attributed debt from our operating JVs by 24% or approximately $100 million by the end of the year. That will certainly be additive to improving our EBITDA multiple. Dollars generated from those activities will be used to fund our remaining development pipeline commitments and obviously reduce leverage and improve the company's liquidity. With those comments, I'll now turn it over to Tom to provide an overview of our financial results. Thank you, Jerry, and good morning. Our first quarter net loss totaled $12.9 million or $0.08 per share. FFO totaled $49.6 million or $0.29 per diluted share and $0.02 above consensus estimates. Some general observations regarding our second quarter results. Being above consensus, we had several moving pieces and several variances compared to our first call guidance. Our management and leasing and development fees totaled $3.7 million, or $1.3 million above our first quarter projections, primarily due to higher third-party lease commission income. Our portfolio operating income totaled $75 million, $1 million below our $76 million forecast, due to some leasing commencing slightly behind budget. FFO contribution from our joint ventures totaled $4.5 million and was $1.3 million above our forecast, primarily due to lower interest expense from the delay in completing the Commerce Square mortgage to June of 2023. Termination and other income totaled $1.4 million and was $900,000 above our first quarter forecast. We anticipate the second quarter result will be a good run rate going forward. We also forecasted one land sale to generate $600,000 gain, and that's been delayed until the third quarter. Our second quarter debt service and interest coverage ratios were 2.9 and 2.8 respectively, slightly better than our forecast, and net debt to GAV was 41.7%. Our second quarter annualized core net debt to EBITDA was 6.5x and within our 2023 range, and our annual combined net debt to EBITDA was 7.6, three tenths of a turn above our guidance. However, we anticipate the metric to improve with higher EBITDA and the forecasted asset sales. Regarding the portfolio, as highlighted last quarter, 405 Colorado is now included in our core portfolio for the second quarter. As Jerry outlined, we continue to make some progress on our financing front. As anticipated, in June, our joint venture refinanced the Commerce Square property with a five-year first mortgage at a rate of 7.75%. The mortgage totaled $220 million and replaces a previous $204 million mortgage maturity, providing $16 million of good news capital for existing and forecasted leasing activity. While the rate is above our forecasted rate, the CMBS market was open, which allowed us to complete this financing, refinancing despite the recent bank failures. While we were successful in completing the Commerce Square financing, we continue to see challenges in the financing market for office properties. The traditional banks are allocating little or no money to new originations for new office loans, except for certain situations such as fully leased build-to-suit properties and good relationships with the sponsor. We think some lenders will be flexible and provide shorter-term loan extensions on performing portfolios with good sponsorship. Regarding our joint venture debt, we are working with our partners on the 2024 maturities to possibly extend the current maturity dates with existing lenders. We're also considering some asset sales within those portfolios to lower leverage. We have commenced marketing efforts with new lenders on a couple of joint venture properties. We anticipate executing a short-term extension on our $100 million first mortgage on our MAP portfolio. As you know, we are a 50% partner in the joint venture, which owns a leasehold position of portfolio of assets. We are working with the lender to recapitalize that loan, along with talking to the joint venture lender, as well as the ground owner. Regarding 2023 guidance, we have narrowed our guidance by $0.04, maintaining a midpoint of $1.16. The range is mainly attributable to the variability of our asset sales program, both in terms of volume and timing, as well as our projected land sales and related gains. Our 2023 business plan includes to have the following assumptions: $100 million-$125 million of second half sales, with dilutions not being significant, no new property acquisitions, no anticipated ATM or share buyback activity, and the share count is estimated to be 174 million diluted shares. Looking more closely at the third quarter of 2023, we have the following general assumptions. Property level operating income will total $77 million and be $2 million ahead of the second quarter, primarily due to increased occupancy at 405 Colorado, 250 King of Prussia Road, and the balance of the portfolio. Our FFO contribution from our unconsolidated joint ventures will total $1.5 million for the third quarter. The sequential decrease is primarily due to higher interest rate expense, primarily Commerce Square's refinancing, and then higher interest rates on our MAP JV as a very favorable swap matures on August first, and a slightly negative impact for the commencing of our residential operations. Our G&A expense will decrease from our second quarter to $8 million due to reduced restricted share compensation. Our interest expense, including deferred financing costs, will approximate $26 million, and capitalized interest will approximate $3 million. Termination fee and other income will total $1.5 million for the quarter. Net management and leasing development fees will be $3.4 million, as we continue to forecast higher third-party lease commission income. Land gain and sales and tax provision will net to a $1 million gain, representing 2 forecasted land sales. We look at our capital plan, as Jerry mentioned, we experienced better forecasted CAD payout ratio of 84%, primarily due to leasing capital costs being below our business plan range. Our first half CAD payout rate was better than forecasted, we have adjusted our annual 2023 CAD range from 95%-105% to 90%-100%. Our capital plan for the second half of the year is very straightforward and totals $220 million. More importantly, we continue to prioritize liquidity and still project no borrowings on our $600 million unsecured line of credit at the end of 2023. Uses for the balance of 2023 are comprised of $90 million of development and redevelopment projects, $66 million of common dividends, $10 million of revenue create capital, $10 million of revenue maintain capital, $30 million of revenue create capital, and $24 million equity contributions to our joint ventures. Primary sources are $105 million of cash flow after interest payments, $10 million projected on our construction loan for 155 King of Prussia Road, $15 million increase in cash will be the result, and we do have $120 million of land and other property sales. Based on this capital plan outline above, we project having full line availability at the end of the year. We also project that our net debt to EBITDA will fall at the upper end of our range of 7.0-7.3, and then the minimal projected income by year-end on the development projects. Our debt to GAV will be in the 40-42 range, and our core net debt to EBITDA range of 6.2-6.5 by the end of the year, which excludes our joint ventures and our active development projects. We continue to believe this core leverage metric reflects the leverage of our core portfolio and eliminates more highly leveraged joint ventures and our unstabilized development and redevelopment projects. We believe these ratios are elevated due to our growing development pipeline and believe that once these developments are stabilized, our leverage will decrease back towards the core leverage ratio. We anticipate our debt service and interest coverage ratios to approximate 2.7, which represents a sequential decrease in our coverage ratios due to our projected development spend and higher interest rates. I now turn the call back over to Jerry. Thanks, Tom. I guess the key takeaways would be, you know, the portfolio is in solid shape. We do recognize there remains some negative overtones on office and the future of office, but we are seeing an increasingly build up in our pipeline as well as tour activity. Major challenge is getting decisions made, but the clear dynamic of the flight to quality, I think we're benefiting from throughout our portfolio. We've also taken a number of steps over the last number of quarters to make sure that our annual average sq ft rollover exposure through 2026 is only 7.3% with strong mark-to-markets, manageable capital spend, and hopefully, a continued acceleration of our leasing velocity. We have covered all of our wholly owned near-term liquidity needs. Our business plan is predicated upon ensuring ample liquidity by keeping our line of credit at a 0. We are actively pursuing a whole range of other financing activities to ensure that liquidity position and our leverage metrics continue to improve. Our business plan is based upon improving liquidity and keeps our operating portfolio on very solid footing with a good forward leasing pipeline to continue executing over the next 2 quarters. As usual, and where we started, we really do wish you and all your families well. With that, we're delighted to open up the floor to questions, Tanya. We do ask that in the interest of time, you limit yourself to 1 question and a follow-up. Certainly. As a reminder, to ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again, and please limit yourself to one question and a follow-up. One moment while we compile the Q&A roster. Our first question will come from Steve Sakwa of Evercore ISI. Your line is open. Thanks. Good morning, Jerry and Tom. Good morning. I was wondering if you could just maybe expound a little bit on the leasing pipeline. I mean, those numbers seem very large in relation to the size of the development pipeline, but obviously, you haven't gotten anything over the finish line. I'm just curious from a decision-making standpoint, you know, what's sort of holding back CEOs, CFOs? Is it this pending recession that continues to get pushed out? You know, is it uncertainty over rates? Like, you know, what sort of gets people to finally make this decision? Yeah, Steve, great question. It's Jerry. I think a couple of things, and George, certainly feel free to chime in. You know, I think when we look at the development pipeline, in particular, you know, those buildings are reaching kind of the latter stage of their physical construction. Mm-hmm. Lobbies are now done, amenity floors are being completed. It shows it's a real high-quality building. I think we've always seen in all of our development projects over the years, Steve, an acceleration of pipeline as the building nears completion. That was a trend line we would expect to see, and I think we're frankly pretty happy, even given the slowness of the Austin, Texas market, with the size of the pipeline bill we've had there just in the last quarter. We are working every moment of every day to figure out the algorithm of how we get people to execute leases. The major thing that we are seeing is that there is general concern about macroeconomic conditions. Particularly, in these larger-sized leases, you know, these companies are committing a huge amount of their own capital to move into new office and, and life science space. The negative overtones or the lack of clarity on where the economy is going is certainly playing into that theme. I've had a number of direct conversations with some of the C-suite executives, some of our key prospects, and, you know, they walk away incredibly excited about the quality of the project we're presenting to them. When they go back to their own offices and start to pencil through the costs of relocation, I think that's giving them a little bit of a pause. We have not heard anything relative to any of our specific projects that's holding anything back. In fact, quite the contrary. I think we have generally, after a tour, we have a very high level of enthusiasm by the prospect. It tends to be more as they work through their own financial situation, what they view as the appropriate time to pull the trigger and sign a long-term lease, tends to be the bigger gating issue. The pipeline itself continues to grow. Very good diversity within that pipeline itself, between large and small users. Very happy with what we're seeing here in Philadelphia in terms of the mix between office and life science prospects. All that being said, you know, our focus remains on getting some lease executions done. We have a number of prospects in space planning. We have a number of prospects, we're working through letters of intent on, a couple on lease negotiations. We remain very anxious to report to all of you some definitive lease signings. We know the projects will lease up. Even with the increased costs, we kept the return on cost metrics the same, because we're meeting very little resistance on our rental pricing. We know we have some work to deliver there, Steve. Great, thanks. I guess on the follow-up, you know, you touched on this, you know, State of Texas lease. I guess just to maybe paraphrase, it sounds like you're not really questioning, I guess, their ability to cancel a lease, but maybe did they provide proper notification and kind of when the lease may actually terminate? Or is there something even questioning the ability to cancel the lease? I guess I'm just trying to make sure, is it more of an if they could cancel it, or more about when it would get canceled? Well, I wanna be careful in my commentary. You know, the lease we executed with the state of Texas contained a standard provision in all in all state of Texas leases, at least all, I say, all to the extent we can determine all state of Texas leases. That essentially, and we see that in a number of other government agency leases as well, that gives the sovereign, the state or the federal government, the right to cancel the lease to the extent that appropriations are withdrawn to support that agency. In addition to that, there are certain other requirements in the lease about backfilling the space with other state agencies and complying with some other notice requirements as well as providing evidence of non-appropriation. At this point, I don't want to say whether if they have the right to cancel or if they do, when that would be effective. I think given the lateness of this notice, we're still tracking down, both from a business, political, and legal front, what the most appropriate steps for us to take are. This lease termination could have significant implications in the state of Texas, since, as I mentioned, most, if not all, the state leases have this provision in them. To the extent we've been able to determine, it's never been exercised before. We have a lot of work to go through before we determine if the notice we received was valid or not. In the interest of full disclosure, as soon as we received that in, we thought it was appropriate to disclose that to our shareholders immediately. As a consequence, we've taken those forward revenue, the rents we would receive under that lease out of our revenue projections and FFO for the balance of 2023. Work to do there as well, and certainly, we are collaborating with the various agencies to try and come to the right answer. Great. Thank you. That's it. One moment for the next question. Our next question will come from Camille Bonnel of Bank of America. Your line is open. Good morning. Can you talk to the retention dynamics during the quarter? I noticed you held your guidance on this, so just trying to understand if any particular tenant or lease contributed to this, or are you seeing stickier behavior, but keeping guidance in case of situations like ATX? Yeah, Camille, good morning. This is George. I'll handle that one. I mean, we had a, you know, very strong quarter, in terms of the second quarter at 71%. We do have two pending move-outs, still to come. One is a 55,000 sq ft tenant, in our Plymouth Meeting portfolio during the third quarter, and then another is a 69,000 sq ft tenant, in Radnor, who will vacate in the fourth quarter. Those two known forward move-outs are really the reason why we've, you know, maintained the full year, you know, retention guidance. Helpful. My follow-up on a different topic is: you've been to the market a few times this year to execute on different financing as part of your liquidity enhancement program, and you're now looking to execute on a construction loan at 155 King Prussia. I know this asset's 100% pre-leased, but do you get a sense from your discussions with the lenders there's still appetite to issue construction loans at the targeted 60% LTV, or is there something under discussion? Hi, Camille. It's Tom. No, I think on a fully, it will depend on the tenant that's going in and the terms of their lease. On this build, a suit that we have in particular, no, I think there is lender appetite for the transaction. I think they may ask for a little more credit enhancement in the way of recourse, but nothing too significant. I do think sponsorship is also important. The interest we did get on the loan, and we do expect to close with one of our banks that we have a good relationship with, is that we did go to banks that we do know. I do think that market is open for a good tenant, with good terms on the lease and also good sponsorship. Thank you. Thank you. Thank you. One moment for our next question. Our next question will come from Michael Griffin of Citi. Your line is open. Great, thanks. I had a question on the Commerce Square JV. I'm curious if the refinancing was contingent on you contributing more equity. If so, do you see more upside in owning more of this property longer term? Anything you could add there would be great. Uh, yeah. Hey, good morning. How are you? Uh, uh, Jerry and I, or, or, uh, Tom and I can tag team this. Look, I think the... We were delighted to get the financing done. It's a challenging market. It's a big loan. Uh, had great debt yield coverage. Normally, it'd be a, be a slam dunk, but it was a, uh, we were fortunate the CMBS market was open. We think that market will remain open, so that could be a viable source of future financings as well. Uh, look, I think as we assess Commerce, need to take a look at the trend line. You know, it's a great asset with significant NOI growth potential.... We've had excellent leasing the last several quarters, uh, with increasing, uh, uh, po- really strong positive mark-to-market rents and good control over capital costs. We think there's a really good pipeline building with leases in process. The neighborhood is also improving. It's becoming much more of an infill location with new residential and commercial development, has great onsite parking and a retail base. I guess our read was, you know, with our debt service costs increasing significantly, the preferred structure we put in place a number of years ago, which was a fairly expensive cost of capital for us, the accrual on that preferred continuing to click away, we felt that given what we see as the increasingly positive trajectory of that property, and the cost of the new debt and the preferred, that given our liquidity position, we were in a position to kind of pay down some of that accrual, redeem some of the preferred equity position, increase our overall stake, and position ourselves to maximize value going forward. Thanks. My next one, just on the development pipeline. I think you talked about pushing out some of the stabilization dates from last quarter. You know, when do you have to start seeing leasing on some of these properties to get you confident to hit those targeted stabilized yields? Yeah, I think in the next couple of quarters. I think, Michael, as we went through the assessment for what to do with those stabilization dates, we kind of went through the, you know, line item by line item in the pipeline and kind of rolled out what we thought we could actually deliver. We think in the next couple of quarters, we need to be posting some leasing activity to meet those stabilization dates. Great. That's it for me. Thanks. Thank you. One moment for our next question. Our next question will come from Michael Lewis of Truist Securities. Your line is open. Thank you. Jerry and Tom, you both gave a lot of color on the Commerce Square refi and some of the work that you have left to do on other JV refinancing. Maybe there's not much more to say on this, but I think it's interesting, you know, how office refis are getting done these days. I'm curious if you could share a little more about the inner workings of, you know, why an 8% stake, how you settled on that, how you settled on the asset value, and maybe share the value that this was priced at, that 8% interest. Just kind of color on how these deals get done and how they work, and maybe Commerce Square as an example. Again, hey, Michael, thanks for the question. You know, I mean, our other JVs, let me start with that, and then Tom and I can talk about Commerce as well. You know, we have partners in all those. Commerce is unique because we're a majority partner there. It's a shared control, so it's an unconsolidated joint venture. In our other joint ventures, on the operating side, you know, other than that, we're kind of 15%-20% owners. Number one, we have good partners. Number two, we have great relations with those partners, so we're working with them very closely on the recapitalization strategy for each of those individual ventures. You know, all the loans at these ventures are completely non-recourse. There's varying degrees of investment position that both Brandywine and our partner have. In all the joint ventures, the operating performance of those have tended to outperform the respective markets they're in. We've maintained very good credibility from an operating and a capital investment standpoint with our lenders. Our lenders, their, I think their bias is to be cooperative and understand the challenges of getting themselves refinanced out. I think as Tom touched on, we do anticipate that in many of these situations, we'll be able to bridge through until there's more liquidity in the overall capital markets. That will be a collaborative discussion with our partner and the lender. You know, in the case of the MAP joint ventures, you know, there, we are a partner with Sculptor. That loan, we own the leasehold, there's a third party that owns the fee. There, we're in discussion with the fee owner, the leasehold lender, and our partner on the best way to recapitalize that. I think, you know, the structure of those operating joint ventures is different than Commerce because they're all common equity, joint ventures. They're pari passu joint ventures. Commerce has this preferred structure, which kind of creates a different waterfall that we're looking at in terms of what's the best approach for us to maximize value out of that venture. I don't know if, Tom, you want to add any color to that? Yeah, Mike, Michael, on that, I guess on the financing itself, you know, we looked at the amount of debt we wanted to put on. In fact, we probably could have added a bit more of good news capital to that loan. As Jerry pointed out, we wanted to make sure we were mindful of where the debt service coverage would go, and our partner was as well, being in a preferred equity structure. In terms of the contribution that we made to the venture, you know, it was broken down into a couple of pieces. I know that you'd put in some implied rates of. ... per square foot and cap rate. For us, it was a bit lower than that. We did repay, as Jerry Sweeney mentioned in his comments, some of the accrued preferred dividends that we had in the project. There's components to both a current and approved. Our contribution not only bought the 8%, increasing us, but also paid off some approved returns. The metrics are a bit lower than the ones you had added. It's more like mid $200s a foot and a cap rate a little above a 7. Not quite at the numbers that you look at by just taking the $50 million and putting it across the 8%. I thought so. That's helpful. My second question, the same store NOI growth looks like it was driven mostly by lower expenses, particularly real estate taxes. Was there anything one-time in there or any color on what drove that? Michael, good morning, it's George. We did have a significant reduction in real estate taxes in our Austin, Texas portfolio. The Travis County Appraisal District had come through and had lowered appraised values. Given the triple net nature of those leases, you know, at our current, you know, 86%, you know, occupancy in Austin, you know, a lot of that then also lowered tenant reimbursements as we, you know, accrued the reimbursement back to the tenant. That was really kind of a one-time event for real estate taxes. Okay, great. Thank you. Thank you, Michael. One moment for our next question. Our next question will come from Bill Crow of Raymond James. Your line is open. Hey, good morning. Jerry, Welcome. Life science space has been in the spotlight a little bit here lately, and I was wondering what your take is on the actual physical return to occupancy levels you're seeing and the overall demand level for life science space? Bill, I mean, certainly the occupancy levels in the lab and research space are much higher than generally in the office. Just that they need to be on site to do that work. That has really prompted for many of the life science companies that we're dealing with, kind of a full return to the workplace. There's equality among the employee base. I think that's a, that's a trend line we anticipate continuing to accelerate. We're seeing more and more companies generally bring people back 3 or 4 days a week. We hope that trend line will continue. I think on the life science side, we're, you know, look, demand is slower than it would have been this time last year. I mean, we have a number of companies who are going through FDA trials. We have a number of companies that are in the process of raising additional financings. We're seeing all the deals in the marketplace. The overall pipeline is up. I think you had a question earlier. I mean, I think macro conditions are having some level of impact upon when they're able to make decisions. The pipeline, you know, on the life science side continues to build, particularly here in University City. We're seeing a good pipeline of activity out in our Radnor portfolio as well. Some of those are I mean, the range of creditworthiness is from, you know, triple-A credits down to emerging growth companies. We're being very, very diligent on making sure we understand the financial condition of some of these tenants. Working through our B+labs partnership with the Pennsylvania Biotechnology Center, they have a scientific advisory board. There's other scientists that we've gotten involved in helping give us some assessment on the validity of the science and the probability of FDA approval, in addition to doing our normal balance sheet review. While demand is muted, it's still, so is also supply. Supply levels are down significantly in terms of plan starts down. You know, our competition here in University City is really three or four buildings where, you know, four or six quarters ago, it could have been much higher than that. I think the supply side has come in significantly. I think our location and the quality of the buildings we're presenting will hold us in very good stead as the demand drivers come to fruition in terms of lease executions. Thanks. One quick follow-up. How much did the tax assessor and the appraiser in Austin lower the values by? How much did the appraiser lower the values by? Oh, you know what, Bill? I'm gonna have to follow up with you. I don't have that information with me. Okay, just curious, average number. Thanks. Yeah. That's it for me. Thanks, Bill. One moment for our next question. Our next question will come from Dylan Burzinski of Green Street. Your line is open, Dylan. Hi, guys. Good morning, and thanks for taking the question. Just curious, you know, expectations for net effective rent in the back half of the year and headed into 2024. Is this a scenario where we could start to see some relief in growing in the net effective rent side of things? Yeah, Dylan, good morning. It's George again. I'll be happy to take that one. Yeah, I mean, we're seeing net effective rent growth. I mean, the fact that we're being able to control capital the way we are, you know... ... asking rental rates have not come under much scrutiny or pressure. I think really across, you know, both city and suburbs here in Pennsylvania, we're seeing, you know, strong positive net effective rent growth. I think in Austin, right now, I think just given, you know, a 16% vacancy, we are competing a little bit more aggressively there. We're probably, you know, kind of flat to maybe slightly negative on net effective in Austin, in the suburban pockets that we have in the operating portfolio. Yeah, I think that, thanks, George. I think to add to that, Dylan, you know, I think one of the other dynamics we're seeing, and you may hear the same thing from some of the other office peers, is, you know, as tenants are returning to the office, more and more, they are looking for better quality workplaces. Even though there may not be the level of net absorption in some of these markets, the levels of leasing activity are still pretty decent. That leasing activity is still willing to pay a positive rent premium to where they're moving from because the buildings are more efficient. They may actually be taking a lower amount of space, the reality is that the physical platform they're providing for their employees is a significant improvement over where they're coming from. That's why one of the real strong stats we had this quarter was, you know, about 60%+ of our new leasing activity was coming from tenants moving up the quality curve. We were still able to post very good mark-to-markets and net effective rent growth. That's a stat we track very carefully because that's a harbinger of where we see effective rents can go. As long as tenants continue to be willing to pay up in rent to move into the better quality buildings, we do see a continued progression of growth in net effective rents. Obviously, there's some markets that are different, as George touched on with Austin. I mean, there, you know, there's still sublease space that we're competing against. Some of that sublease space is in high-quality buildings, and to the extent that they are willing to discount rents, that creates a little bit of downward pressure on us, which is why in our business plan, we've really assumed, you know, negative mark-to-market for the balance of the year on our targeted Austin leasing activity. Appreciate you guys' comments on how the lending environment remains challenging for office, but just curious, in your discussions with lenders, is there a certain debt yield that they're targeting? Dylan, this is Tom. I think that we've been seeing debt yields that are in the low double digits. It'll depend on the property and the tenancy, but they are in the low double digits in terms of debt yields that they are looking to target. Great. Thanks, all. Thank you. Thank you. One moment for our next question. Our last question will come from Anthony Paolone of JP Morgan. Your line is open. Thank you. Wanted to follow up on the life science leasing pipeline. I think you mentioned 400,000 sq ft for 3151, it's almost the size of the whole building, so that seems positive. Just, what's the alternative universe for the folks looking at that project? Like, just trying to understand how much share you all might need to get that project built up, and also, I guess, relevant for, you know, the space at 3025 as well. Yeah. Good morning, Tony. The competitive set in University City is, you know, primarily 3 other buildings, 2 others of which are under construction. You know, we think each building is fairly good in quality. Their delivery times are different. To some degree, whether they'll be in the mix or not in the mix with a prospect today, will really be based upon their delivery timeframe. In addition to University City, where we compete with those buildings, you know, sometimes some of these tenants look in different submarkets, whether it be the Navy Yard or out in the Pennsylvania suburbs, particularly Radnor. The, the universe is much smaller than it was, as I mentioned, in a previous comment, you know, 4 to 6 quarters ago. I mean, I think the, you know, the upside to the downside of the lending activity is that, not a lot of projects are getting financed. In addition to that, given the increase in costs, the yield requirements are higher as well. The lower supply coming online and the increased cost to build these buildings, not just from a hard cost, but now from a soft cost standpoint, you know, are pushing rent levels up fairly significantly in order to have the numbers pencil. We think that trend line will be in place through this, through the stabilization dates of both 3025 and 3151. We think even within that competitive space, we think the proximity of Schuylkill Yards to the train, to the regional rail network, to 30th Street train station, proximity to the Schuylkill River Trail, easy walk to CBD and all the amenities there, does position us very strongly against the competitive set. That being said, as I mentioned earlier, we know we need to get some of these leasing, lease prospects across the finish line. That's our core focus. Okay, thank you for that. I guess, just follow-up 1, relates to the dividend. You know, you talked about the focus on liquidity, but also, you know, a little bit of improvement in the payout. I'm just wondering, is there a point in time where the board just takes a finer look at the dividend, and you all reassess? Just, you know, how to think about the calculus around the dividend right now. Sure. Look, a fair question, and to amplify, the board takes a hard look at this every quarter. Some of the factors that come into play on that is obviously our own portfolio performance, how our capital plan is progressing, what our forward leasing pipeline looks like in terms of NOI accretion. Then we spend a fair amount of time really talking about kind of the macro conditions as well as Brandywine's overall liquidity needs. We'll have that same discussion in September as we start to contemplate the third quarter dividend distribution. Look, our capital plan, as Tom outlined and is referenced in the SIP, is doing much better than our original forecast. We have done a good job of navigating some challenging waters in the financing markets to meet our financing objectives. That being said, we still have work to do, and that work needs to be done against the backdrop of a very challenging capital market environment. Variable right now is the pace of sales activity, and the pricing at which some of those sales take place, and how some of these joint venture loan negotiations go. I think by September, we'll be able to provide the board with some additional clarity on those points, we'll sit down and make a decision on what we think the third quarter and any forward dividends may be. The fact that we can cover our dividend today based upon a revised forecast, that's a positive, but we've got to keep in mind that that's a Brandywine specific situation versus us dealing with a very challenging macro market condition. Okay. Thank you. Thank you, Tony. I would now like to turn the call back to Jerry for closing remarks. Tanya, thank you very much. Everyone, thank you for participating in our second quarter earnings call. We will look forward to keeping you updated on our next third quarter earnings call in the fall. Enjoy the rest of the summer, and thank you again for your engagement. This concludes today's conference call. Thank you for participating. You may now disconnect.