Cost of interest-bearing liabilities declined to 3.96% from 4.02%, helped by CD repricing and growth in lower-cost fintech deposits.
Diluted earnings per share were $0.02 for the quarter, impacted by elevated credit provisions and changes in noninterest income.
Interest income increased while interest expense decreased in Q2 2025, resulting in a net interest margin above 2% on a tax-effective basis.
Net income for Q2 was $28 million ($29.1 million fully taxable equivalent), up 11.5% and 11% respectively from Q1.
Net interest margin improved to 1.96% (2.04% fully taxable equivalent), driven by higher loan yields and lower deposit costs.
Noninterest income was $5.6 million, including $1.6 million gain on sale of SBA loans, down $7 million from the prior quarter due to holding loans longer.
Yield on average interest-earning assets rose to 5.65% from 5.57%, with loan yields exceeding 7.5% on new originations.
Brandywine Realty Trust reported a second quarter net loss of $89 million or $0.51 per share, including $63.4 million in impairments in the Austin portfolio.
Capital ratio improved to 4.1%, below the 2025 business plan range, due to capital control and construction efficiencies.
Deferred tenant improvement costs recognized were $5.5 million or $0.03 per share in CAD ratio; accrued but unpaid preferred dividends were $3.8 million or $0.02 per share.
Development projects incurred $0.14 per share of negative carry, including $0.10 per share in noncash preferred charges.
FFO contribution from unconsolidated joint ventures was negative $5.8 million, impacted by higher concessions at Solaris House during lease-up.
FFO for the quarter was $26.1 million or $0.15 per diluted share, meeting consensus estimates.
Interest expense was $0.5 million less than forecast due to capitalized interest.
Mark-to-market was 2.1% on a GAAP basis and negative on a cash basis, with increased guidance ranges based on executed leases.
Second quarter occupancy was 88.6% with 91.1% leased; Philadelphia occupancy was 93.5% and Austin occupancy improved due to asset sales.
Strategic Balance Sheet Repositioning for Interest Rate Cycles
The company has strategically repositioned its balance sheet to reduce asset sensitivity, aiming to drive consistent net interest income growth throughout interest rate cycles.
Focus on enhancing ability to adapt to changing rates, with a clear long-term success plan.
FAD was $0.33 per share, a $0.04 sequential increase, representing a 96% payout ratio, a significant improvement from the first quarter.
Net debt to adjusted EBITDA sits at 6x, with expectations to decrease into the mid-5x area by year-end.
Normalized FFO was $0.41 per share, a $0.02 sequential increase, and up nearly 7% year-over-year, driven by strong occupancy gains, disciplined cost management, and a decrease in share count.
Same-store occupancy was 90%, a 40 basis point sequential increase, with same-store NOI growth of 5.1%, a 280 basis point sequential increase, the highest in 9 years.
The company completed a successful renewal of its revolver, extended the tenor of term loans, and raised 2025 normalized FFO per share guidance to $1.57 to $1.61.
Year-to-date asset sales increased to $211 million at a blended 6.2% cap rate, with over $700 million of additional assets under contract or LOI.
Dafinchi