Brandywine Forms JV with Creek Investments

Brandywine Realty (BDN - Snapshot Report) recently announced that it has formed a joint venture (JV) with Current Creek Investments, a wholly owned subsidiary of The Allstate Corporation (ALL - Analyst Report). Both Current Creek and Brandywine will own 50% interest in three metropolitan DC properties contributed by Brandywine. The joint venture bought the properties from Brandywine for $156.0 million.

The joint venture secured $90.0 million of non-recourse property financings with a weighted-average maturity of 7.4 years. Brandywine will provide property management, leasing, and construction management services in the venture.

Brandywine has received proceeds worth $120.1 million after deducting the costs associated with the formation of the JV. The net proceeds from the transaction will be used to reduce the company's debt under its unsecured revolving credit facility and for other general corporate purposes.

Additionally, Current Creek and Brandywine have each allocated $75 million in equity to pursue additional office property investments in the metropolitan DC sub markets. This venture is a win-win situation for both the partners and will enable them to enhance their respective portfolios and expand their relationship.

The company reported funds from operations (FFO) of $60.3 million or 41 cents per share in the third quarter of 2011 compared with $45.6 million or 32 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Brandywine Realty is one of the largest, publicly traded integrated real estate companies in the United States. Brandywine owns, develops, manages and has ownership interests in a primarily Class A, suburban and urban office portfolio comprising 307 properties spanning 35.1 million square feet.

Brandywine Realty currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

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