Brandywine Realty Trust (NYSE:BDN) Q3 2019 Earnings Conference Call - Final Transcript
Oct 18, 2019 • 09:00 am ET
Ladies and gentlemen, thank you for standing by, and welcome to the Brandywine Realty Trust Third Quarter 2019 Earnings Call. [Operator Instructions]
I would now like to hand the conference over to your speaker today, Jerry Sweeney, President and CEO. You may begin.
Gerard H. Sweeney
Thank you very much. Good morning, everyone, and thank you all for participating in our third quarter 2019 earnings call. On today's call with me, as always, are George Johnstone, our Executive VP of Operations; Dan Palazzo, our Vice President and Chief Accounting Officer; and Tom Wirth, our Executive VP 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 these 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 file with the SEC.
So looking at our business plan, we are in great shape and substantially done for 2019. So after a very brief review of our 2019 plan, I will outline our 2020 earnings guidance and our business plan. Tom will then provide a synopsis of financial results, and after that, Tom, George, Dan and I will be available to answer any questions you may have.
Our business plan continues to be very straightforward, simply take advantage of great product in strong markets to lease space at increasing net effective rents by controlling capital cost, delivering positive mark to markets with strong annual rent increases. Our 2019 plan accomplished that objective, as will our 2020 business plan.
We are 100% done on our speculative revenue target for '19. The leasing pipeline looking forward remains deep for our existing inventory at about 1.5 million square feet, including approximately 270,000 square feet in advanced stages of negotiations.
For the third quarter, we posted strong rental rate mark to markets of 9.3% GAAP and 4.2% cash. Year-to-date, our cash same-store growth rate is 1.9%. As you may recall, we did elect last year to keep a major renovation project in our same-store pool. That project, 1676 International Drive, in Northern Virginia, is undergoing a full renovation and is currently 21% occupied. I'll touch on it a little bit later, but this project will deliver an excellent return on our invested capital.
By keeping it in the same-store, however, it has had a 100 basis point and 250 basis point adverse impact on our 2019 and 2020 same-store growth rate. To illustrate this impact, as well as the impact on our occupancy levels, we did provide a roadmap of 1676 International Drive's impact on same-store and occupancy levels on page 7 of our supplemental package.
Based on excellent progress so far, we've raised the bottom end of our range $0.01 to $1.41 and narrowed the top-end to $1.43 for a midpoint of