Good day, ladies and gentlemen, welcome to the Brandywine Realty Trust fourth quarter 2017 earnings call. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Jerry Sweeney, President and CEO. You may begin.
Glenda, thank you. Good morning, everyone, and thank you all for participating in our fourth quarter 2017 earnings call. On today's call with me today are George Johnstone, our Executive Vice President of Operations, Tom Wirth, our Executive Vice President and Chief Financial Officer, and Dan Palazzo, 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 file with the SEC. We'll start with a review of our 2017 results and then move into our 2018 business plan.
I'm really just going to touch on 2017 results as our disclosures lay out a clear roadmap that demonstrate our very solid ending to 2017. From an operational standpoint, we exceeded the vast majority of our goals, namely tenant retention, cash mark-to-market, leasing capital costs, and our average lease term. In addition, we met our cash and GAAP same-store targets, the lower end on GAAP and the higher end on cash. We did come up about 70 basis points short on our same-store leasing target for the year, primarily driven by the timing of lease executions by definitive prospects that have been or will be signed in Q1 2018. We also continued on our path to grow net effective rents, with 2017 having a 7% increase over our net effective rent average of 2016.
On the investment front, you may recall our original disposition target was $100 million at a forecasted 8% cap rate. We finished the year with $430 million of sales, not including the recently announced evo transaction. Our average cap rate was about 6% on a GAAP and cash basis. The major contributors to our fourth-quarter investment activity are included on page three of our supplemental package. On the balance sheet, we made great progress during 2017. Net debt to EBITDA closed out the year at 6.2 times versus 6.9 times at the beginning of the year. We accessed the public debt markets, raised $550 million at an average yield of 3.9%, used those proceeds to pay off $325 million of 4.95% bonds. We also paid off $100 million of 6.9% coupon preferred shares during the year. We reduced our average cost of debt by 45 basis points.
We lengthened our debt maturity to 7.7 years from 5.9 years at the beginning of 2017. We ended the year with a net cash balance of $202 million, zero balance on our line of credit, with minimal floating rate exposure through the company. We also increased our quarterly dividend from $0.16 to $0.18 per share for a 12.5% annualized increase. Finally, to further improve our funding capacity, financial flexibility, and improve our balance sheet, we did utilize our ATM program, which has been in place since 2013, and sold $51 million of stock at an average price of $18.19 per share. It was a challenging decision for us, but frankly, given the sector's equity market volatility, interest rate headwinds, we opted to issue the shares to ensure continuation of our balance sheet targets and also to ensure forward funding capacity.
From an earnings standpoint, this issuance was $0.02 per share dilutive to 2018 FFO. At the midpoint of our guidance, we are still posting a 4.5% FFO growth rate and 11% CAD growth rate with a constant dividend coverage of 68%, even after the dividend increase. From an NAV perspective, this issuance did not dilute net asset value with the consensus NAV of $18. At the high end of the NAV range, it resulted in $0.03 per share NAV dilution. In the lower end, it was actually accretive. Since we don't really publish an NAV, I only reference those as relevant data points to our investors. Our approach when issuing those shares was to ensure that we met our balance sheet targets, preserve tremendous financial flexibility to forward fund our development value add pipeline.
That was a decision we made in the middle of December of last year. To wrap up, 2017 resulted in solid execution on the key pillars of our strategic plan, namely growing earnings, growing cash flow, pre-funding our development, and enhancing our balance sheet. We ended the year with solid operating performance. The success of our investment and financing activities demonstrated our discipline to continually improve our balance sheet Create a growth-driven portfolio and pre-fund our development activities. As indicated in our press release, we have updated our previously issued 2018 guidance range, which was previously $1.36 to $1.46 per share, to $1.33 to $1.43 per share. The revision to our midpoint is driven solely by $0.01 per share dilution caused by the evo sale and the $0.02 per share dilution caused by the ATM issuance.
Looking at this year, our 2018 plan is off to a great start. We already have 75% of our revenue plan done with a strong pipeline of pending lease activity. We believe our operating plan is on solid footing with a bias to the upside. Our 2018 business plan objectives are clearly laid out on page three of our supplemental package, and we also compare our 2018 targets to our four-year business plan targets on page six. Bottom line, 2018 represents a continuation of strong operating results with occupancy and leasing levels improving, positive mark-to-market, positive cash same-store growth, and capital costs remaining within our targeted range. Our current business plan does not incorporate any acquisitions nor any dispositions beyond our evo sale. We are continuing to project one development start during the year with a dollar value ranging between $50 million to $100 million.
As we have emphasized, we don't really plan on starting any new development without a significant pre-lease and a strong pipeline of follow-on deals. The only financing activity we have in our plan is a recasting of our $250 million term loan, which we anticipate doing during the first half of the year. Just some other quick notable highlights. Focus remains on cash flow growth, capital allocation, and a strong balance sheet. With the evo sale and the ATM issuance, we're now projecting achieving our 6.0 times EBITDA target by 2018. Strong cash flow, even with our 12.5% dividend increase, we anticipate maintaining a solid CAD payout ratio of 68% at the midpoint. Just in looking at our development and redevelopment pipeline. First of all of our development activities are clearly laid out on pages 13 through 15 of our sup.
Our overall development pipeline is currently 77% pre-leased, and our projected remaining spend is about $168 million. That's been fully pre-funded through our sales acceleration. We did proceed on two smaller renovation projects, 500 North Gulph Road and 426 Lancaster Avenue, with an anticipated aggregate investment base of $39 million and targeted return levels of 9.5% cash on cash. As part of our Schuylkill Yards development, we did close on the acquisition of One Drexel Plaza, a 283,000 square foot office property for $35 million that we plan to reposition over the next 12 to 18 months. Based upon our preliminary budget of $83 million, which includes the acquisition price, we anticipate a targeted return of 9%. We have also executed a lease with a life science company for 108,000 square feet, who will begin staging their occupancy in late second quarter of 2018.
We also started construction of our 165,000 square foot building at Four Points in Austin, Texas. That project is 100% leased to an existing tenant under a 10-year lease with estimated costs of $48 million. We anticipate delivering that in Q1 2019 at an 8.4% projected return on cost. We also started construction on our 4040 Wilson project, a 50% joint venture ownership interest as a mixed-use development in the Ballston submarket that will contain 189,000 square feet of office, 36,000 of retail, and 250 apartment units. The office and retail component is currently 46% pre-leased, leaving us with a little over 100,000 square feet to lease over the next two years. Estimated cost will be $225 million. All of our equity is funded, and the balance of cost will be handled via third-party construction loan. We anticipate substantial completion in Q1 2020 with an office stabilization in Q3 2021.
We continued construction on our Subaru of America project at our Knights Crossing campus. That project is 100% leased on an 18-year lease at a 9.5% return that incorporates 2% annual bumps. We continue to advance planning, pre-development, and zoning efforts on several other development sites, including 405 Colorado in downtown Austin, Garza Ranch in suburban Austin, and our Broadmoor master plan in the northwest part of Austin, our Metroplex project here in the Pennsylvania suburbs, and phase one of Schuylkill Yards. At this point, George will provide an overview of operating performance, including some color on our 2018 business plan, and then turn it over to Tom for a review of our financial performance.
Thank you, Jerry, and good morning. We continue to be pleased with the pace of activity in all of our markets. As Jerry detailed in his commentary, market activity and our team's ability to source, negotiate, and close deals allowed us to beat a number of our 2017 goals. These same characteristics have us off to a great start to 2018, with 75% of the plan achieved. The pipeline, excluding development properties, stands at 1.6 million square feet, with over 300,000 square feet in advanced stages of negotiation. During the quarter, we generated 92 space inspections totaling 547,000 square feet, outpacing the third quarter in both measures. In terms of our core markets and the underlying assumptions contained in our 2018 leasing plan, in CBD Philadelphia, during the fourth quarter, we renewed and expanded Comcast at 3 Logan Square.
Our CBD portfolio rollover exposure is now below 9% each year through 2021. As discussed on our last call, a 100,000 square foot tenant vacated five contiguous floors at 3 Logan on January 1st. Since our last call, we've executed leases on two of these floors and are under LOIs for two additional floors. The four deals were done at an average cash mark to market of 10%. At Cira Centre, two full contiguous floors totaling 55,000 square feet roll on June 30th. Our 2018 plan still assumes these floors remain vacant for the duration of the year. We've had several tours to date and have one proposal outstanding for half of the space. Turning to the Pennsylvania suburbs, our fourth quarter activity in Radnor has increased our leasing percentage to 92.5%.
The large suites vacated in 2017 continue to see good levels of activity. Tours have picked up in the last two weeks. We have assumed 90,000 square feet of currently vacant space to be reabsorbed in the latter half of the year. We've done selected demo in several of the spaces and completed several common area improvements during the fourth quarter to aid in our leasing efforts. The pipeline in Radnor consists of approximately 235,000 square feet, including seven prospects over 20,000 square feet. In Northern Virginia, we're currently 91% leased, and with Northrop Grumman's renewal in Dulles Corner behind us, our annual rollover in Metro D.C. is also below 9% for each year through 2021. Tours in our Northern Virginia portfolio were up year-over-year.
The pipeline of new deals is 270,000 square feet. We have approximately 100,000 square feet of new leasing in our open 2018 business plan. Market drivers in D.C. continue to be Metro access and fully amenitized buildings. Austin's economy is as robust as it's experienced in nearly two decades, with regional unemployment at 2.7%. Our Broadmoor 6 redevelopment remains 79% leased. A number of prospects continue to show interest. We have no doubt the remaining space will lease up quickly in the hot Northwest Domain market, which is increasingly known as Austin's second downtown. The remaining portion of our DRA joint venture continues to perform well. We're 70% done on their leasing plan, with both mark-to-market and same-store NOI growth continuing to demonstrate high growth characteristics.
Our business plan targets remain unchanged from our last call. A point to elaborate on is same-store NOI growth. As a result of several large move-outs occurring in the second half of 2017, coupled with the Three Logan vacate this month, our first and second quarter same-store growth metric will be below our annual range. The same-store portfolio will return to growth levels ranging between 3%-5% on a GAAP basis and 2%-4% on a cash basis in the fourth quarter as these spaces are reabsorbed. It is worth further noting that our current 83-property same-store portfolio will increase in the third quarter when FMC Tower, 1900 Market Street, and 933 First Avenue transition into the same store.
With these additional four properties in the mix, our second half of the year same-store NOI will range between 10%-13% on a cash basis and 4%-5% on a GAAP basis. To conclude, we're delighted with the achievement to date on the business plan and with the activity levels in our markets to meet the balance of our 2018 objectives. At this point, I'll turn it over to Tom.
Thank you, George. Our fourth quarter net income totaled $73.1 million, or $0.41 per diluted share, and FFO totaled $53.7 million, or $0.30 per diluted share. Some observations regarding the fourth quarter results, same-store rates for the fourth quarter were -2.3% GAAP, +3.3% cash, both excluding net termination and other income items. We've had 20 positive quarters of this cash metric. While we have negative quarterly same-store growth, we achieved positive for the full year 2017. We incurred $6 million or $0.03 per share of one-time related costs to early debt extinguishment of debt, comprised of $3.9 million from the early redemption of our 2018 bonds, $800,000 of net interest expense due to having the bonds outstanding for the make-whole period, and $1.3 million for our share of costs related to the prepayment of the mortgages related to our Austin joint venture.
Due to timing, the issuance of shares through our continuous equity program generated an incremental 510 weighted average shares during the quarter. Our fourth quarter fixed charge and interest coverage ratios were 3.2 and 3.4 respectively, and common shares issued in the fourth quarter sales activity reduced our net debt to EBITDA to 6.2. Looking at the first quarter of 2018, the following are just some of our general assumptions. Property level NOI will be approximately $75.5 million, a sequential $1.5 million increase from the fourth quarter of 2017. FMC office and residential operations will generate an incremental $2 million of GAAP NOI. One Drexel, 3000 Market, and Four Tower Bridge will generate an incremental $500,000. Partially offsetting these increases is $500,000 of NOI from the fourth quarter based on asset sales.
Another $500,000 will be negatively impacting our NOI for the first quarter related to demolition costs for one of our redevelopment projects. FFO contribution from our unconsolidated joint ventures will total $6 million and reflects the joint venture sale of evo. G&A, consistent with prior years, our first quarter G&A will be high at $9 million, our annual G&A for the year will be $28 million. Interest expense will decrease to $20 million, reflecting the full quarter effect of our bond transactions in 2017, and capitalized interests will be $500,000. Termination and other income will be $500,000 and $600,000 respectively. Net management leasing and development fees will be $2.5 million, and we have no incremental ATM activity in our plan. Looking at the capital plan, we project CAD will be up 11% from the midpoint of our range.
The coverage is very similar to our 2017 coverage based on the CAD growth and our dividend increase. Uses for 2018 will total about $370 million. It is comprised of $160 million of development and redevelopment, $130 million of common dividends, $38 million of revenue maintain, and $35 million of revenue create, and $7 million of mortgage amortization. The primary sources will be $215 million of cash flow from operations after interest, $43 million from evo proceeds, and $112 million of use of cash on-hand. Based on the capital plan outlined, our projected cash balance will be approximately $90 million at the end of the year. Based on equity issuance and the evo sale, we now project our net debt-to-EBITDA ratio will be at 6 times by the end of the year, and our debt to GAV will remain in the high 30% area.
In addition, we anticipate our fixed charge ratio improving to 3.4% and our interest coverage improving to 3.8%. I now turn the call back over to Jerry.
Tom, thank you. Thank you too, George. To wrap up, 2017 results strong. 2018 is off to a very solid start. We remain very focused on growing earnings, growing cash flow, managing our forward leasing rollover risk, which, as George touched on, we have down into the single digits. Maintaining and ever-improving our balance sheet, and creating a steady pipeline of value add opportunities. With that, we would 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.
Thank you. Ladies and gentlemen, at this time, if you have a question, please press star then one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, you may press the pound key. To prevent any background noise, we ask that you please place your line on mute once your question has been stated. Our first question comes from the line of John Guinee from Stifel. Your line is now open.
Great. Two quick questions. First, very nice call. Amazon HQ2, I really always hate to ask this, but what are the primary locations for both Philadelphia and Austin? Then second, 4040 Wilson, how much, Jerry or whoever, is the development per square foot for the office and retail, and the development per unit cost for the residential?
John, first of all, on Amazon, it's obviously a big topic nationally. I think from our perspective, first of all, congratulations to the cities that made the short list. We're really delighted that Philadelphia was on that list and followed up with Austin and D.C. being on that list as well. Our role in that really honestly, John, is to stand at the ready to assist the city in any way we can to facilitate their bid. We're very enthusiastic about that. Who knows where that process goes. I think as I mentioned on the last call, it's fascinating from a real estate standpoint to see what kind of a disruptive influence the process Amazon has used for site selection has had on our business. I think it's going to generate a lot of positive long-term value for our industry.
Look, there's a whole range of sites, most of which are online, that people can check out in terms of the shortlisted cities. Schuylkill Yards is one of the developments that was submitted as part of the Philadelphia bid. We again stand at the ready to help the city out any way we can to facilitate that process, as well as in Austin and D.C. as well. This is really a process being led by Amazon. At the forefront are the political and civic leadership of the respective cities, and our role is to support them however we can to have each of the cities put forth the best bid they possibly can. Wilson. Oh, sorry, John. Wilson. 4040 Wilson development cost. Yeah, I think our overall development costs are looking at $560 a square foot.
I don't have the breakdown in front of me, John, so we can follow up between the breakdown between the retail, the office, and the residential. I apologize for that, but we can certainly follow up with that. As we started to look at moving forward with that project, we certainly saw an opportunity to secure a credible worthy tenant, from a pre-lease standpoint, who had a 2020 delivery. That sub-market, we think is, and the location warranted, we think is a great location that will get better. We think we're building into a stronger market, with the delivery of the Ballston Quarter Mall, that Forest City is building. There'll be another 400,000 sq ft of retail, new restaurants, outdoor dining, et cetera. We think that sub-market and the location of the project that we started will continue to be better.
We actually did see an opportunity to introduce a bit of a mixed-use tower to that market. It's a differentiated product with a bit of a differentiated amenity package. We think that that will wind up being a real point of difference for us as we lease up the balance of the office space over the next couple of years and fill in the balance of the retail, and the apartment leasing. Okay. Lastly, real quick, will you be in Minneapolis next weekend? Football's about family in the Sweeney household, so we're trying to evaluate all of the different options. I'll either be there or we'll be having a big family party. Probably the latter, because I think I enjoy watching it with my brothers and sons and daughters and nieces and nephews. It's an exciting time. All right. Congrats. Thank you, John.
Thank you. Our next question comes from the line of Rich Anderson from Mizuho Securities. Your line is now open.
Thanks. Good morning, everybody. Just a big picture question for you, Jerry. I guess this is a recurring theme from Brandywine in terms of dispositions bringing down their earnings growth profile. As we wrote in our note last night, we understand them to be very good real estate decisions, value creation, and all the rest. I'm curious where you're at on that process, because we sense, I guess a sense of frustration from investors that are waiting on growth going up as opposed to down, and maybe the disposition process is nearing an end so that we won't have these things to explain in future periods. I'm just wondering how you balance the idea of good real estate decisions with the fact that you're a publicly traded REIT, where growth at the quarterly basis matters to people.
Rich, fabulous question. Look, it is a struggle. We talk to a number of investors that are, I don't want to say equally split, but there's clearly a recognition that there sometimes is a distinction between earnings momentum and value creation or value harvesting. I guess as we look at it, we've sold an awful lot of property, almost $2.5 billion over the last five years. We do believe we have about $400 million of non-core properties left to sell. I think more thematically, as we looked at the events of the last call quarter or so, including the sale of evo, we looked at that even with this sale of evo, which I'll talk about in a second, we're still generating what we think is a top quartile FFO growth in the office sector.
Again, our primary focus is on cash flow growth, we were able to really generate low double-digit cash flow growth. We also think that kind of in these uncertain times, it does make sense to make sure that we're really bulletproofed on the right side of the balance sheet. Certainly having increased financial capacity is very much at the top of our thoughts. We also, with that general theme, we do take a look at the office markets continue to be in a state of disruption across the board, whether the impact of technology, new product coming online. We do recognize that markets and sub-markets are ever-changing, and we really need to be mindful of where we think each of those markets will be in the next five to 10 years, and frankly, where our product will be positioned in those markets.
We always want to maintain earnings momentum, and we do acknowledge that this asset churning does create a sense of frustration by some investors. Honestly, from, I think a shareholder perspective, I don't think we'd want to be in a position where we're afraid to trade off FFO for value creation and harvesting. As you know well, markets move, both capital markets and real estate markets. I think our approach going forward is, I think we will remain opportunistic. For example, on the sale of evo. That was a wonderful opportunity to sell what's a non-core asset in a really core location for us. We had a great partner with Harrison Street there, who knows this market segment very well.
After some test marketing, we were able to really identify an international global investment fund based in Southeast Asia who was able to see the long-term value in owning that property. They made their first entrance into the Philadelphia investment market, which we think is a great result for our portfolio with some great read-through. The two sales that we've done at Cira Centre South have both been to foreign investors, which we think really starts to validate the investment thesis in Philadelphia that we're trying to create. We take a look at some of the non-core assets. As we look at the plan going forward, we would hope to identify asset sale opportunities with some matched funding for either asset acquisitions or creating some value to our development pipeline. That's a long-winded answer. We acknowledge the concern that some investors have raised.
We did look at our landscape for 2018, that even with these sales, we were still posting pretty good growth metrics, that, as we said for the last several years, have certainly learned the lesson, making sure that our balance sheet remains in exceedingly good shape going into whatever the cycles bring.
Great. I'll stop it there. Thanks very much for the color.
Thank you, Rich.
Thank you. Our next question comes from the line of Michael Lewis from SunTrust. Your line is now open.
Thanks. I actually was going to ask that same exact question that Rich just asked. You gave a good answer to it, but maybe I could take it one step further, which is, another thing about Brandywine is it's common for you to have assets for sale, but you're very particular about getting your price, and you're not afraid to take it off the market. I was wondering if you could share how much you have on the market now, and then it sounds like from your comments, if you've got $400 million of non-core, do you think it's not out of line for us to be kind of assuming that you sell roughly $400 million over the next couple of years kind of opportunistically?
Rich.
Mike.
Mike, I'm sorry. I think that's a good assumption as you look out over the next couple of years. I think we've really done a great job of getting the portfolio back to where we want it to be. These non-core assets, we're still working through some of the value creation that we think we can harvest from them, which is why when we developed our plan, we didn't really lay out a target number. Right now, we really do not have a lot of the market. We always respond to reverse inquiries, which we always get in from all three of the markets that we're in. I do think as we look going forward, we are going to be very focused on continuing to monetize our land holdings, which we've had great success over the last couple of years.
That we are going to continue, as we've laid out in our four-year business plan, try and reduce our exposure to some of these joint ventures. We were able to do a couple of good transactions in the latter part of 2017 with a partial sale of DRA, swapping some property interests with our Conshohocken venture to exit that, as well as on the Allstate side, sell out of the property in Bethesda into really advantage, we think, a strong investment market there. I do think that, as we said on previous calls, we think a lot of the heavy lifting is behind us in terms of the portfolio repositioning.
I do think it's incumbent upon us to always be very mindful of where we think these markets are going, and to always stay in close touch with capital sources in the investment market to make sure that we are in a position to respond as we see opportunities come up.
Thanks. You mentioned the tough decision to issue the shares. I was just wondering if you think you may have more appetite to do that if the stock trades above $18, which seems to be about the consensus NAV. Maybe now that you have this clear path to the target leverage, maybe you would have less appetite to do more equity unless the stock price, of course, got much higher.
Yeah. I think the primary thought process we had on this ATM issuance was to really make sure we were in great shape from meeting our balance sheet targets. I think as we look at going forward, we would be looking at any equity issuance tied to an investment opportunity that would create value for our company. If you kind of look at it from a strategic standpoint, we viewed this $50 million of equity issuance that really was the last piece of the puzzle in kind of achieving our balance sheet goals. I think going forward, we're going to be very focused on where that currency can create value for our shareholders on a going forward basis.
Thanks. If I could ask just one more. I'm going to put the cart way before the horse here and ask, when Amazon picks a market. Well, first, I don't know, I guess they probably pick a location within a market. Do you have any sense on how you kind of negotiate the terms of rent and terms like that? Do you think that there's any expectation that Amazon or the government would expect you to make concessions if, for example, they pick Schuylkill Yards? I'm just curious how the process would work once we get past this initial part.
Michael, it's a good question. Honestly, I don't have any real visibility into it. Honestly, our role has been in a support one to the public policymakers, both the city and the state level where we are, to help them develop the real estate fundamentals and present the best platform for them to, in turn, present to Amazon. Amazon's an incredibly smart, incredibly talented company that knows what their business objectives are. My expectation would be whatever selection they choose, or selections they go for another shortlist of that pack they take, it'll be an intense negotiation across the board.
Our role really is one of total support and how any site, not just a Brandywine site, but any of the sites that are under consideration on the company, how they all fit in, I think is a big TBD in the minds of all the real estate owners.
All right. Thank you.
You're welcome.
Thank you. Our next question comes from the line of Rob Simone from Evercore ISI. Your line is now open.
Hi, guys. Morning. Thanks for taking the question.
Yeah.
Just a quick housekeeping question for us. Now that you guys have dealt with at least part of the Comcast lease, you talked about the move-outs at the end of June. Sounds like you're early on dealing with those. Are there any other tenants in the portfolio that you could speak to that might give you pause as potential move-outs over the next, call it, 12 to 18 months?
Sure. It's George addressing the question. We only have four leases in the balance of 2018, over 20,000 sq ft. I mentioned in my prepared remarks the 55,000 sq ft at Cira. We've got a 48,000-sq ft tenant down in Dulles Corner that we know is going to move out in the third quarter. The other two tenants that are over 20,000 sq ft are both projected to renew, and we're in negotiations with them right now. As we look into 2019, our largest exposure is with Comcast at Two Logan, and we continue to just wait and evaluate what their ongoing needs are gonna be. I think they continue to grow and need space and are in the building now, so we're kind of just playing that one by ear. That's a 1/1/19 event date.
Three others, all over 50,000 sq ft, we're in active negotiations with already and think that we'll end up retaining or hope to retain each of those. Again, 2018, 2019, and even 2020 expirations are all on the table with our leasing teams every day to try and further mitigate our rollover exposure.
Got it. That's helpful. Thanks, guys.
Thank you.
Thank you. Our next question comes from the line of Craig Mailman from KeyBanc Capital Markets. Your line is now open.
Hey, guys.
Morning.
George, maybe if you could, I know you guys have another piece left with Comcast, just any update there potentially on what they're planning to do? Just remind me, was any of the Comcast expansion related to the activity you're seeing for the Verizon backfills?
Yeah. On the Three Logan piece, the expansion occurred outside of the Verizon floors. We did take one tenant who was in a Comcast expansion floor and move them down to the Verizon. The rest of that leasing activity in the Verizon space has come from other parts of the city. The Two Logan piece, again, as I said, I think it's a little bit of a wait-and-see. They expanded by 65,000 square feet in Three Logan, they need to kind of staff that up. Then we'll kind of see what the next bite of the apple is.
Okay. What's left on Verizon now?
Just one floor. 20,000 sq ft.
Jerry, on evo, it was unclear from the press release. Did Harrison Street sell their interest as well?
Hey, Craig. Yeah. 100% of the interest in the property was conveyed, so Harrison and Brandywine sold as well.
Okay. Just lastly, I know we've hit on dispositions here a bit, and I know we talked about last quarter, but just the decision not to include any incremental at this point, and it's kind of the fatigue with you guys giving guidance and then a quarter or two later, lowering guidance again. Just the decision not to look at what you have in the market, what you really think you're gonna sell this year, and put that into guidance and, if you have to, at the end of the year, raise guidance because you didn't hit the disposition target. Kind of the decision to not go that way rather than the kind of thousand cuts here we've seen.
Well, hopefully it's not a 1,000 cuts. It's a good point you raise. I think from our perspective, we were coming off of a really heavily weighted disposition goal in 2017. Frankly, some of that was, I won't say it was a surprise to us because we put properties in the market. As was mentioned earlier, we do lay out pretty solid price targets that we try and achieve. As we're coming out of 2017, I think our perspective was that the primary focus we have in the company is, as I mentioned, to keep growing earnings, growing cash flow. We felt like a lot of the immediate market self-positioning we were targeting, we had achieved. evo was a process that we had a very solid bar that both Harrison Street and Brandywine set for an exit.
We frankly weren't quite sure we would get to that level. We wound up having a very well-orchestrated process that had a lot of discipline and communication to it. We were able to identify a buyer who had the quality of being able to deliver efficiently on a transaction that size and had a really good long-term perspective, which fit in well with what we're trying to do here in University City. We weren't really sure that transaction would come across the table when we did our last earnings call.
Okay. Thanks, Jerry. Bye.
Thanks, Craig.
Thank you. Our next question comes from the line of Manny Korchman from Citi. Your line is now open.
Hey, good morning, guys.
Morning.
Tom, just jumping back to the ATM raise for a second. I get that you want to build up some dry powder. In your minds, is there a use for that dry powder that you're just hesitant to put into the 2018 plan? Development starts didn't move, acquisitions didn't move. Do you have that money earmarked, and you're just not disclosing for what, or are you just trying to make sure that you have dry powder going into, let's call it, the end of 2018 or even into 2019 with that leverage target that you've set out in the past as sort of the bogey you're going for?
Yeah, Manny, I think as Jerry mentioned, we did want to get to the bottom end of that range and hit the 6.0, and I think that was a driving predicate. We do have several, as we did say, we have one development start we'd like to do. We will be taking on some debt attribution leverage with 4040 Wilson. Those were two items. Then we have a couple other opportunities for development also. I think it was leave some dry powder. We'll have cash at the end of the year, as I mentioned, of close to $90 million. I don't think it was a liquidity decision. I think it was more towards leverage as well as having some dry powder to make sure we hit the 6.0 times.
George, just thinking about Schuylkill Yards as a bigger project, how much of the demand, or at least the discussions you're having right now, are coming from tenants that are already at FMC, especially in the context of rent abatement at that project running off and being provided at the Schuylkill project?
Well, I think anybody looking at Schuylkill Yards is a couple of years down the path. We haven't really had any discussions with our existing tenant base for Schuylkill Yards, we continue to get a number of inquiries from inside the city, outside the city, outside the region, about that project and all of the elements that it brings to the table.
Great. Thanks, guys.
Thank you.
Thank you. Our next question comes from the line of Jamie Feldman from Bank of America Merrill Lynch. Your line is now open.
Great. Thank you and good morning. I'm hoping you guys can just talk through your thoughts on future development projects. If we look at the land inventory on page 16, if you could handicap what next starts might be, or maybe just talk through kind of the level of interest in build-to-suits for some of those projects.
Sure, Jamie, we'd be happy to. We continue to finalize the approval processes for our 405 Colorado project in downtown Austin. That market is doing incredibly well. Rents have continued to migrate north on both a notional and effective basis. It's about a 200,000 square foot building with parking underneath it. It's not a large building in terms of square footage. While we're finalizing the approvals, we're spending a lot of time pre-marketing that project. We certainly view that as something we'd want to start as soon as we sign up a tenant. We are also down in Austin in the process of wrapping up our approvals on Broadmoor, which as you know is a multi-phase build-out.
We're starting the planning process now on a couple of individual buildings there that we think will be well received, but that's probably, in terms of delivery, a 2019 event. Here in Philadelphia, I think the focus is primarily on our Metroplex project, which is out in Plymouth Meeting, which is, depending upon the configuration, could be between 200,000 and 340,000 square feet. We're in active discussions with a number of prospects on that. We are designing an incredibly high-quality building that is something unlike anything the Philadelphia suburbs has seen before. It's a side core configuration, very efficient floor plates, a lot of green space.
The price point we're trying to achieve there is at the upper end of the market, we're getting good traction on that because of, I think, some companies recognizing the value of that location and also the quality of the work environment that they can create there. On Schuylkill Yards, we continue to work with our partners Gotham on the residential side, and Longfellow on the life science side, along with our Brandywine team to really think through the various components of our phase one development, which we still currently contemplate will be an office and life science building. We're also evaluating an expansion of a retail base there, as well as the incorporation of potentially some residential.
Down in D.C., we were able to get the 4040 Wilson transaction moving forward, we're just in the pre-marketing mode for the balance of our office inventory down there.
Okay, that's helpful. I guess, just your views on co-working and how you think it's going to make a difference going forward in your markets, and how you guys are reacting to the trend.
Yeah. Look, I think it's a very viable delivery platform that addresses the needs of a number of tenants. I think it will be interesting to see how co-working evolves from kind of the small startup entrepreneurial model to really serving as temporary office space for large corporate users. We track that. We have some of the co-working spaces in our existing inventory. We spend a lot of time with those folks thinking through how we can facilitate their growth, while at the same time accommodating expansion requirements, even if they're temporary, by some of our more traditionally based tenants. I think we've maintained a very good relationship with a number of the co-working companies.
Certainly, the platforms we have in all three of our key markets, I think are attractive to them in terms of the location, the quality of sponsorship, where they want to be part of our inventory. The next step for us is really thinking through how we can piggyback some of their ideas to meet a temporary niche that we see in some of our corporate-level tenants. I think we would expect to make some progress on that during 2018.
Do you see meaningful growth through those types of tenants over the next year or so in your markets and in your portfolio?
Yeah. I think we'll see continued expansion, Jamie. I'm not sure I would define it as meaningful growth, but I think there's about 500,000 sq ft of that in the overall Philadelphia market. It all seems to be doing pretty well. There's a lot of variability between the location of those co-working spaces. One doing incredibly well given its location, another one not doing so well. A lot of the locational attributes, amenity attributes that we typically see with our standard corporate traditional tenant are also requirements of some of these smaller startup companies as well. I think there'll be continued expansion. I don't know if it will be substantial growth over the next 12 months, though.
Okay. Thank you.
Thank you.
Thank you. That concludes our question and answer session today. I would like to turn the call back over to Jerry Sweeney for closing remarks.
Great. Well, thank you all for participating in our fourth quarter call. We look forward to updating you on our activities on our first quarter call later in the spring. Thank you very much.
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone have a great day.