Good morning. My name is Brandy and I will be your conference operator today. At this time, I would like to welcome everyone to the Brandywine Realty Trust Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Gerry Sweeney, President and CEO. You may begin your conference, sir.

Brandy, thank you, and thank you all very much for joining us in our year end 2014 earnings call and good morning. On today's call with me are George Johnstone, our Executive Vice President of Operations; Tom Wirth, our Executive Vice President and Chief Financial Officer, and Dan Palazzo, our Vice President and Chief Accounting 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 assurance that the anticipated results will be achieved. For further information on factors that could impact our anticipated results, please reference our press release, as well as our most recent annual and quarterly reports that we filed with the SEC. To move into our agenda, as we normally do, we'll start with an overview of our three key business plan components, operations, balance sheet and investments. George will then discuss our 2015 leasing and operating efforts. And we'll then turn the call over to Tom to review our financial results. We closed the year with a very solid leasing quarter that capped off an extremely strong 2014. These results have laid a solid foundation for continued strong performance in this current year. When we look back at 2014, operationally, we exceeded many of our 2014 key targets, spec revenue, retention, lease term, GAAP mark-to-market and met many of our other key business plan objectives. We wound up leasing of 4.4 million square feet during the year, one of our highest totals ever and we have had over 500,000 square feet of positive absorption for the year. Brandywine’s occupancy levels continue to outperform our markets, most notably, Philadelphia CBD and the Pennsylvania Suburbs, in Northern Virginia and Delaware,…

Thank you, Gerry. It was an extremely busy quarter for our regional leasing and construction teams. We signed over 1 million square feet of leases and commenced approximately 1.2 million square feet, including over 800,000 square feet of new and expansion leases. As a result, we ended 2014, 91.4% occupied and occupancy has increased 310 basis points over the last two years. These efforts ensured our 2014 business plan metrics were achieved and have set the path for continued progression as we begin 2015. Activity levels around the company remained strong. Weekly inspections during the quarter averaged at a 170,000 square feet, comparable to 2013 levels while down quarter-over-quarter as expected due to the holidays. Our leasing pipeline totals 3.2 million square feet, including 565,000 square feet in active lease negotiations. Our CBD Philadelphia, Austin and Pennsylvania Crescent markets continued to perform extremely well. In CBD Philadelphia, we are 97% leased, outperforming market vacancy by 800 basis points and have less than 5% rolling in each of the next three years. The decline in vacancy in the Class A office sector has been driven by tenants taking the flight to quality, tenants relocating from outside the city and continued office to apartment building conversions. This tightening has allowed us to continue to push rents. Leasing spreads are projected to increase 16% on a GAAP basis and 6% on a cash basis during 2015 in our CBD Philadelphia portfolio. In Austin, we are also 97% leased. The Austin market remains hot, where 1.6 million square feet of office space was absorbed during 2014 and overall market vacancy is 8.6%. Leasing spreads there continue to rise. We are estimating a 50% and 6% increase for GAAP and cash respectively during 2015. The Crescent markets at 97% are also well-positioned for continued rent…

Thank you, George. As Gerry mentioned earlier, the capital markets activity we executed in the third and fourth quarters represents significant steps to improving our balance sheet and positioning us, for us to execute on our business plan. Our fourth quarter FFO totaled $54.1 million, or $0.30 per share diluted and our FFO payout ratio is 50% based on our current $0.15 per quarter distribution. For the full year, our FFO totaled $227 million or $1.34 per diluted share and our FFO payout ratio is 45% based on our $0.60 per-share annual distribution. Some observations regarding the fourth quarter results, same-store rates for the fourth quarter are 2% GAAP and 1.4% cash, both excluding termination and other income items. We've had 14th consecutive positive quarters for GAAP and 10 for cash metric on that growth. Our same-store portfolio margins remain relatively unchanged, compared to the third quarter. Termination income totaled $1 million, in line with our guidance. G&A expense totaled $6.7 million, which came in higher than previous guidance, primarily due to $300,000 of acquisition costs. Interest expense totaled $29.5 million and was $1 million below the third quarter due to the completion of our liability management program in October. Interest income increased $2.7 million, primarily due to the repayment of interest on a fully reserved note, totaling about $1.5 million of income and $700,000 of income from our short-term loan to the Austin joint venture related to our River Place acquisition in October. Additionally, associated with our liability management, we made Make Whole premiums that took place in October for those that were tendered in the third quarter and that resulted about $5.1 million of cost for those Make Wholes. FFO contribution from our unconsolidated joint ventures totaled $7.2 million. It was above our third quarter results, primarily due…

Thank you, Tom and George, thank you as well. To wrap up our prepared remarks, 2014 was an outstanding year for our company. Great execution on operations, investments and balance sheet management with all trend lines that are moving in the right direction. ‘15 is off to a strong start and our hope is that we successfully execute our business plan. We’ll continue to focus on financial strength, NAV growth, taking advantage of ever improving fundamentals and the pragmatic pursuit of select external growth opportunities. With that, we’d be delighted to open up the floor for questions. As we always do, we ask that in the interest of time, you limit yourself to one question and a follow-up. Thank you very much. Brandy?

[Operator Instructions] Your first question comes from Emmanuel Korchman with Citi.

Good morning.

With the increase in the speculative revenue targets and the execution rates to date, if we look at the corresponding to your occupancy and same-store NOI growth numbers, there were no changes. Is that just conservatism or is it just a shift within the range or is there something else going on?

Yeah. I think we just feel confident that we’re going to perform within the range. I think from an occupancy perspective, we continue to kind of just guide to the midpoint. I think obviously with the weekly inspections, the pipeline and the achievement to date, we’re certainly hopeful that we can get enough leasing done to kind of get to the upper end of those ranges. But -- and kind of the same thing on both on the same-store growth as well.

Great. And then on the acquisition pipeline, if we’re to think about how much of that’s going to be vacant or land or development products versus standing inventory. Do you have a rough breakdown?

Yeah. Manny, this is Gerry. At this point, we really don’t. We’re looking at number of different opportunities. I mean, certainly we would expect today, a good portion would be value-added existing assets. We are looking at the number of partials of ground where we think there might be an opportunity to acquire. Future developments get passed at a very good price. But we don't really have a full breakdown of that at this point.

Great. Thank you.

Thank you.

Your next question is from Jamie Feldman with Bank of America.

Thank you. Good morning.

Good morning.

You guys had good occupancy and for some lease growth in Northern Virginia and the DC suburbs. Can you talk a little bit about what’s going on there? I mean, I know our defense analysts are talking about the budget maybe being out to contractors finally and DC had a decent fourth quarter in terms of CBD leasing. So just kind of big picture of what’s going on in that market and are you guys thinking about where we are in the cycle?

Well, look, Jamie, this is George. We clearly have seen kind of continued uptick in activity. We’ve seen a nice uptick in tenant expansions taking place down there. And we really have seen kind of that flack the quality. And I really think our recent successes in Dulles Corner, I think are really -- kudos to our local team for kind of seeing the need to kind of invest in those buildings. We got almost immediate dividend and just a level of broker towards tenant, inspections and we benefited this quarter by signing those two leases. Similarly, what we saw up in the I-270 Carter last year, so I think our tollroad properties are positioned well. We continue to be able to offer tenants the petty packages they are looking for, the signage packages they are looking for. But it’s still a very competitive market. But I think our team has done a great job in just kind of cutting the chase and getting deals negotiated quickly.

Yeah. I’ll just add on to that. It’s been very encouraging last couple of quarters with the activity we’ve had but also just in general, the de-back seems to be at it. Tenant’s psychologies began to change a bit and that the -- kind of after years of rightsizing, lots of small midsized tenants will begin to grow again. There are so many expectations. It will be a lot more reward in terms of government contracts. And there is -- as we’re saying, the class A were higher quality products. Clearly, it’s outperforming the B and the C. So we are fortunate that we are very well positioned with very good assets as George alluded to. We probably had to refurbish a well located asset. We put money in there. But if you like to take a look statistically, that market remains a bit of two worlds worth of saying. The newly build or the higher quality renovated properties located in close proximity to a good amenity base of class A location, access to transit and significantly outperforming buildings that are 25 year older haven’t been renovated, no capital improvements, limited amenities and that’s really where we’re focused on which is trying to improve our buildings, make sure that we add to our leasing and marketing teams which we’ve done. And even though, as George touched on, the market remains competitive. We do think that the refurbishments we’ve done, the marketing positioning we’ve done really has been one of the major reasons for significant -- really good performance in 2014. And think a pretty high percentage of 2015 already being done with some upside remaining.

So when you think about the leasing pipeline you guys mentioned and compare it to may be this time last year like how does that market feel different now?

Well, I mean, I think the pipeline in Northern Virginia specifically is significantly higher than it probably was this time last year, but I think that there is more tenants in that pipeline that have more clarity on their own business and their ability to make a decision. So I think we had some prospects in the pipeline this time a year ago who were kind of out looking for space, but just weren’t sure what they could or couldn’t do. I think now we are finding the tenants that are coming out, they know what they need and they are able to kind of make a quick decision.

Okay. Thank you.

Thank you.

Our next question is from Michael Lewis with SunTrust.

For Jerry or Tom, you guys issued equity each for the last couple years and I know it wasn’t in the original plan last year. It doesn’t appear that you need any this year certainly, but I was wondering if there was any scenario out there where you thought that might be a possibility, or if it’s just highly unlikely?

No, look we never say anything is highly unlikely. The reality here is we’ve been on a path to grow NAV and one of our objectives obviously is to have our public currency or stock price reflect that NAV value. We have -- we are entering a market where we think there are increasing opportunities to create forward growth for the company. We also have, as I mentioned, on every call and we talked about a key driving business plan that we need to continue to improve our balance sheet. So it’s certainly from our perspective, with our sales program, and as I touched on, our expectations that we will try and accelerate some of those sales efforts to provide some additional liquidity. We think we have a number of great opportunities to internally generate funds for growth, but clearly we would never preclude the fact that we would continue to strengthen our balance sheet, whether on an absolute basis or to facilitate some other growth opportunities.

And just one other last one, CBRE is projecting 5% market brand growth in Philly this year and almost 7% in '16 and '17. So it seems like some of your developments are maybe in the right window there. I know your portfolio is basically full of a CBD, but is this kind of -- would that outlook be better growth than you had expected and how does that kind of relate to your original development underwriter?

Good question, Michael. Look we certainly believe that Philadelphia’s recovery will continue to accelerate and we are seeing -- and that’s part of a national demographic shift towards urban course. Philadelphia has done a marvellous job in the last decade of really expanding its downtown residential base and then Colorado expansion of retail culture institutions, etcetera. So it’s really we think a very good prescription for continued growth. From our perspective, we certainly looked at that when we commence construction of FMC Tower. It’s good to have better than 60% pre-leased, but as I mentioned on that one, my comments that we still have 250,000 square feet to lease. So we have a good pipeline of prospects for that. In addition to that, we have a property that are wrapping up renovation on at 20th Market Streets in Philadelphia, 1900 Market Street building. We have a major rollover that coming after the tenant lease expires in at the end of 2015. The renovation plan on that project will be completed by the third quarter. And we have a very good list of prospects for that as well for occupancy in '16 and '17. So we’ve tried to number one in Philadelphia accelerate renewals that we could on our existing inventory to help de-risk the portfolio. And as part of that, as George touched on, we’ve gotten on very -- we have achieved good mark-to-market and very long lease terms. That kind of de-risked the existing platform. That positioned us well to be aggressive in both leasing of that FMC Tower and 20th Market Street. But also with the additional headwinds we’ve seen come into or tailwinds we see come into the city relative to the company is now moving back into the city. We think that further accelerates our ability to be successful in those developments.

Okay. Thank you.

Your next question is from Ian Weissman with Credit Suisse.

Good morning. Jerry now that you are about 90% leased in Northern Virginia. In the past, you have been very -- you haven’t been shy to say that you are willing to give trade lease terms and CapEx for occupancy just to drive that number up. Now that you are sitting at 90%, do you think it will be a bit more aggressive and holding out for rent at this point?

In certain buildings, yes. In other buildings, I think they are still be aggressive. I think we always do follow the kind of the mantra of lease and down repair. We have extremely solid leasing and marketing folks in our DC operation. One of their major objectives is to really assess on a real-time basis where they think the inflection points are on lease negotiations. But thematically in, you are on point, which is, I mean, a lot of our bias the last couple of years was to really plug holes and to be aggressive in doing that to kind of stabilize that portfolio. The team down there did a very nice job. We still have more wood to chop, so we will remain on an aggressive posture. But certainly given some of the accelerated activity we’ve seen on 270, with the success we’ve had on dealing with that large Lockheed vacation with the great success the team has had thus far on the repositioning of the Dulles Corner, it has given us the ability on those locations to start to push asking rents as we are going through that leasing cycle. So that has worked out exactly as we hoped it would and we would anticipate that the rest of '15 will have great results from those locations. But look generally you have a market where there is still an oversupply of space, a lot of that is B quality, but that B quality space still does create a drag on the ability to really push rents as much as we would like across the board.

That’s right. And just my follow-up question, you ended the quarter I think with about $250 million in cash. I think quarterly call you said you’ve thought you would end 2015 with essentially a zero cash balance. So just given what we know about your net acquisition plans for the year and other capital needs, just kind of walk me through how do you get into zero cash balance by year end? Are there going to be some early refis from '16?

I think that we ended the cash, the reason we entered the end of this year a little lower on our cash balance is because we thought the note receivable, the $88 million that we had put out there for River Place would have been refinanced by the end of the year. That didn’t take place. It took place in January of this year. So that was one reason. The other reason is our sales target was lower and partially due to that $28 million that enrolled into January, also adding cash factory year end. So our cash balance was below where we thought it would be, but it’s really due to timing of when the proceeds came in between December and January. When you look at our '15 capital plan, I think last quarter we thought we would be sort of breakeven with no cash. As I outlined I think we will probably be between zero and $10 million, so we are still be kind of in that range, maybe a little better than where we thought. A lot of that cash is coming, two of the big uses that you mentioned, one is the speculative acquisitions, which is 250, but then also we had 259 million of development projects, which again two of the larger ones are FMC at a 190 million and Encino Trace at 42 million, along with the few other projects, such as 1900 that Jerry mentioned. So those are some of the bigger uses of cash that are going to cause our balance to get closer to zero by the end of the year.

Okay. All right. Thank you very much.

Your next question comes from Jed Reagan with Green Street Advisors.

Good morning, guys. On the disposition guidance increase, just wondering is that the signal that the pricing or finding in the market for some of that is just coming in better than what you might have expected several months ago and maybe just how would you characterize the debts of the buy pool and financing available for sort of these lower core and non-core assets these days?

Hey. Good morning, Jed. We are definitely seeing a better pool of buyers out there unquestionably. And as a result, we are moving more things in the market. The properties that we have in negotiation or through the bid process, we’re pleased with the pricing that we seem to be achieving. So we, as I mentioned, are hopeful we can exceed even the revised higher targets, but the higher target gone from 150 to 180 really reflects the slide of a sale from we’re anticipating at the end of '14 into '15. But there's no question in terms of answering your broader question there is, we see a better bid list or a deeper bid list, better pricing, more easier access to better financing. So we think that the investment climate for these types of product is stronger now than it was a couple quarters ago.

And would you say that those trends will deploy to some of your more colocations as well? And then maybe just general comments about cap rate churns you’ve observed over the past several months in your markets?

Certainly, look, I mean, when we take a look at our kind of the roundtable of our markets, we’re seeing continued cap rate compression in number of the Pennsylvania suburbs, even a slight downtick in cap rates in New Jersey and Delaware from where they were last year. So there’s been a fairly robust investment market in Philadelphia CBD with cap rates on the quality properties breaking below 7%. So I think the expectation of these markets continue to perform well with the prospect for at least generally more possibly biased economic growth and lower rates are really pushing a lot of people into these products.

Okay. Great. And just last for me, from any updates on the progress that 4040 Wilson and then also at EVO would you say that at least, the progress is coming along as you expected?

Yeah. Well, first of all, for 4040, we roundup executing exactly the plan that we had outlined before, which was we were in the pre-marketing phases for 4040. To compress the delivery time on the building, the partnership went ahead and invest that money to complete the below grade garage that will be completed very shortly. But we have not signed up an anchor tenant. And we do not plan on proceeding with the vertical construction of the office space until we sign a significant tenant. Our partner and our leasing team are working with the number of prospects, but until something is actually inked, we don't plan on moving forward. EVO, we’re actually very pleasantly surprised. The team is reenergized, is very much focused on accelerating activity kind of into the '15-'16 academic year, that’s over 50% already done. The renewal rates have been much higher than average. Marketing platform is working very well. So, we’ve been pretty pleased in the last quarter with how that product is getting a much higher local franchise between University of Pennsylvania graduate students and Drexel students, so we have expectations. Or the plans we have laid out in terms of the stage lease up of that property will come to fruition as we enter the '15-'16 academic year.

Okay. Thank you.

Thank you.

Your next question comes from Brendan Maiorana with Wells Fargo.

Good morning. George, very good leasing activity, net absorption in the quarter, it appeared like your net lease economics deteriorated a little bit in this quarter relative to where it’s been in the recent past? But you still have kind of the same outlook for net economics for ’15? So was there something that drove both the CapEx per square foot per year higher and the rent spreads lower in Q4 that you don't expect to occur as we go out into ’15?

Yeah. Good observation. Look, two big deals in the fourth quarter, one was the CNSI deal in Rockville, Maryland, the backfill Lockheed Martin. The other was the Commonwealth of Virginia deal in Richmond that backfill Travellers, so roughly 200,000 square feet. At a little bit higher capital per foot per lease year but 11-year deals, so you won't see that recurring capital occur for quite some time. And kind of the same dynamic on mark-to-market during the quarter from those two transactions as both Travellers and Lockheed had been in those buildings for a long time and had kind of gone through many years of 2% to 3% annual rent bumps that, obviously, those markets didn’t sustained. But we do kind of feel confident that everything going to gets back. I mean, if you look back 340 absent those two deals, would have been 272 for the quarter so.

Okay. Okay. That's helpful color. Either for Tom or Gerry, just you’ve got the 250 of acquisition that are included in there. You mentioned that maybe you're going to pick up your disposition target, because -- or activity because pricing is good? How are the acquisitions shaping up given that it's a pretty challenged pricing seems to be challenged in a lot of markets, given that’s moved up pretty nicely? And maybe for Tom, can you remind us, where are the acquisition slated to come in and the impact that they would have and the impact that they're having on your guidance from an FFO perspective?

We will tacking, Brendan, on the acquisition front look, we are -- there are certainly some markets where pricing is well above replacement cost, yield compression, cap rate compression is well beyond our threshold. And in those markets, anchor, they have focused more on -- let say, if we can effectively create for development pipeline that would position us for growth in the out years. In a number of other markets that there are still, what we view is value add opportunities versus some of what we have done in past with this 1,900 or 660 Germantown play where we can find. Properties that either for tenant rollover reason physical plan issues, financing concerns, really you are going to point will they need some additional lift and we are evaluating a number of those. The primary ones looking at those are kind of in the Philadelphia, Pennsylvania Suburban area and we would expect that some of those acquisitions would come our way. We’re also looking at some acquisitions in other markets that would fit the criteria of value add we think we can deliver a higher than normal rate of return and have an investment base below placement cost. So when we set that target, we knew the acquisition climate was challenging. But we also know that we have a pretty good pipeline of smaller deals, $25 million or $50 million type of transactions that we think might have the right ingredients for us to proceed. Tom, do you want, how their timing?

Yeah. Brendan, we have the timing basically in the second, third quarters back ended in those quarters. So the activity, the amount of income that’s coming off and is going to be a fairly small in 2Q. And then obviously a little more in 3Q and 4Q, totaling a few cents per share that we expect to come off of the shares that’s in our guidance.

Okay. All right. Thank you for the color.

Thank you.

Your next question is from Craig Mailman with KeyBanc Capital Markets.

Maybe just quickly, can you reconcile the increase in spec revenue versus kind of the unchanged assumption on lease economics? And kind of the roll forward you guys have, I know you sold some assets that came down, but net-net, you have a little bit more on the termination side. Can you just kind of run through that quickly?

Yeah. Craig. Sure. It’s George. Look, the spec revenue change really has been driven by the deals we’ve executed to date. As I’ve mentioned in an answer earlier, I mean, that page 6 roll forward, what kind of purpose are we guiding that to the midpoint of our range. We know that certain properties maybe disposed during the course of the year. I mean, the two buildings we sold in New Jersey had somewhere between 10 to 20 basis points of impact on occupancy. So we are trying to just keep that inside the range. And we are doing the same thing quite frankly on same-store NOI growth. So, I think, depending on what we sell in the timing of that that could impact those ranges. And then obviously continued conversion of the pipeline that we feel confident about at this point would certainly drive us towards the upper end of those ranges.

That’s helpful. And then turning to FMCG, its sounds like you have some good activity there. But just following kind of Liberty’s, lease up of the balance of Comcast with that tenant. Can you just talk about, as you kook at your pipeline, maybe how much of that was looking at both assets? And so maybe now you have a little bit more leverage and I guess, to an earlier question about potential rent growth in [Sully] [ph], what are you guys seeing on that particular asset relative to kind of underwriting?

Couple of points. One is the tenants that we're talking to and has entered our pipeline in the last quarter really weren’t actively looking at Comcast new building. I think there was a general expectation in the market, where there is an expectation or hoping it came to fruition was that the Comcast would take all that space. And so there was an issue of that space being actively marketed to third-party tenants until there was some more clarity on what Comcast’s intentions were. So the tenants that we bring into our pipeline are really evaluating, either moving into the city from the suburbs or expanding from some city locations and the FMC Tower. And certainly given the uplift in rents in the existing stock in the city, not just at the trophy level but also at the A&B level, it certainly has made our value proposition to tenants for FMC Tower even more attractive.

And if I can slip in another quick one, can you just remind us the agreement in Camden, with Campbell Soup, are you guys just going to collect fees on developments there or would you guys actually rebuild the suites that you’d keep on balance sheet?

Yeah. The transaction we have with Campbell’s is that we’ve been designated as the master developer. And we have an option to take down land as we identified development opportunities. The model we’re working on is very much the model that we’ve been able to achieve with Subaru, which is that -- when that option land is taken down from Campbell's, it will be done to Subaru. The last Subaru becomes the land owner and the owner of the building. So in that case, we really are a key developer in that complex. And that seems to be given the economic development act in New Jersey in how those tax credits are determined. There seems to be a real bias on the part of the company -- the tenant to become the owner. So we would certainly anticipate that our cover business plan being a key developer and will be the predominant type of activity we have there.

Great. Thanks.

You’re welcome.

Your next question is from Mitch Germain with JMP securities.

Good morning. Just further on the topic, so we should see an increase in fee revenue associated with Campbell's and Subaru next year is that the way you think about it?

Yeah. That is correct, Mitch. I mean, right now, given the somewhat uncertainty when that construction will actually commence whether it’s late ‘15 or early ’16, our current plan is not include any fee revenue from anything related to the gateway project.

Great. And then I think George you mentioned 3 million or so square feet in the pipeline. If you could break that out between what’s operating and development?

That is all operating. Yes.

It’s all operating?

All operating. Yes.

Great. Thanks guys.

Thank you, Mitch.

And your next question is from Gabriel Hilmoe with Evercore ISI.

Quick ones, Tom, on the term-loan refinancing expected for this year, what’s the timing expected for that?

We basically think we’re going to refinance our line of credit and our term loan sometime in the first half of this year.

Okay. And then did you have a number for your expectation for capitalize interest for ‘15?

Capitalize interest for this year will be about $11 million.

Great. Thank you.

And there are no more -- there are no further questions at this time.

Great. Thank you all very much for participating. And we look forward to update you on our first quarter activity on our earnings call in later April. Thank you.