Brandywine Realty Trust (BDN) Earnings Call Transcript & Summary

Next up are reimagining the business and the future of work panel, Larry Bilker. Larry, come on, welcome to the program. Larry, what's on your mind today? I think you got a mute issue first. There you go. Now we can hear you.

Have to press the button.

Yes, sir.

That brings up a good point. We believe a lot of people are still transitioning to work from home. A lot of people are learning how best practices and how to make it all work. We have a large number of people that need to still figure out how to work best when working remotely. And we've had communication after communication after communication, we've had videos and best practice sharing. Nobody is an expert. Maybe you, Hunter, maybe you are the expert, and you could teach everybody how to work better, and doing all these sessions across the globe now and probably have 1 billion best practices this year. But...

[ We're learning out of ] this pandemic is you have to lead with humility. If you claim you're the best, then there's nowhere to go but down.

Exactly. Exactly. So we've made this big transition. So for 2 seconds of background. My name is Larry Bilker. I'm the Chief Information Officer of Pyramid Healthcare. We're a team of 2,400 employees across 7 states, 100 facilities, servicing about 11,000 patients a day in mental health and substance abuse treatment, all centered around behavioral health care. Go ahead, Hunter.

Interesting stuff. Post pandemic, what's your mind regarding the whole pivot and shift for you?

Well, we're actually in the midst of doing the, call it, the return to work program right now. And that's all about transitioning into this hybrid telemedicine model for our outpatient businesses. And that's -- it's proven to be a bit of a challenge. We thought that transitioning to home work was good. Now when we're back in the office and we've got some sessions that are being held through telemedicine in the office to people that are remote, some people that are coming into the office face-to-face like we used to and then we've got this thing called hybrid, where if you think about if you're doing what's called a group session, now if anybody has ever been in one of these, but if you have, the rooms are only so big. When you're sitting around a circle with chairs, it's not so bad. Now you have to do this thing called social distancing. So your circle becomes much larger. You got to put 6 feet between people. How do you fit the same number of people in a room when they're distant. I'm an engineer by trade, but you can draw a circle, try to do same thing to fit 12 people around a circle of the same size, 6 feet apart. You can't do it. So you have to put some people that are remote and some people that are on site. And it's a bit of an equation. But we have to figure out how to do these things in combination, both remotely and on site. That's what we refer to as hybrid telemedicine. And we've got, what, 2,000 people doing this [Indiscernible] of the day. Go ahead, Hunter. Sorry.

If you had to innovate yourself, have you had to drive an innovation agenda?

Sure. Well, I mean, this is old school stuff. But frankly, we had to outfit rooms that had no technology in it whatsoever. And put televisions in there, computers in there, microphones that can pick up the entire room and a webcam that can see -- wide-angle webcams. I mean this is old school stuff, but doing it rapidly within a week, is not so easy to do, even with Amazon.

Excellent. Any surprises during this whole pandemic?

There's a new surprise every day. The key is, as I think, as you started, is using humility and try to remind people that we are in this massive -- we are in a pandemic, we're in a transitionary state and to keep people focused on the prize of providing care.

It's somewhat unbelievable or surreal, right? And to keep your mind and -- your mind open and your spirit open, so you can actually see, engage what really matters, what's important, what's not, right?

Very true, very true. I mean the -- I think Brian was talking about earlier about a little bit more time to spend with his family. You could talk about this in a slightly different word, is about finding better balance. And I think Jennifer mentioned earlier about making sure you have some -- or might have been Garry who said boundaries about making sure that you do sign off, that you go outside for a walk, just do something different. I mean I'm a technologist by trade and by the root of my being. But you got to balance it out or you start to climb the walls.

Right. Stay with us, Larry. We're going to move on to James. James Kurek, welcome to the program, CTO and Innovation Officer, Brandywine Realty Trust. Innovation is in your title. So what -- how is the pandemic affected the innovation agenda?

Thanks, Hunter. So yes, the innovation is in the title. And that was something that Brandywine wanted when I joined them. I've only been with them 4 months now. So I was in the office for 4 days. The pandemic had already started. And on my fifth day, it was time to go home. Everybody work remote. So it was hair trigger at that point. One of the biggest things I noticed was the traditional information technology -- technologies for working remote were in place. People can VPN and they can get to their cloud platforms and stuff. What changed was the business processes. So in other words, instead of one person being home and working remote with the perspective being that there's many more people in the office, now you have nobody in the office. So there's a bigger impact on business processes. Nobody can walk over to your desk and get something or go tap somebody on the shoulder because you need them for something. Now the entire company has to truly learn for work from home or from a remote location.

So we -- one thing you learn about innovation is innovation often happens when you restrict resources.

That's right. That's right. So one of the things we're doing is we're starting to leverage existing technologies in newer ways. So for example, with Liberty Property Trust, which was primarily an industrial, big box industrial REIT and the product was warehouses, well, we're looking to take some of the warehouse technology that would monitor forklifts and people walking around the warehouse and things of that nature and bring it into the office space and say, wait a minute. We've got locations around water coolers and things of that nature, where we've got too many people gathering. We've got too many gathering locations. What can we do. How does our space need to be resigned, so -- redesigned. So a lot of the IoT conversations and things like that are not necessarily about utilizing new technologies, although some of them are, but it's about using technologies that we already have available to us in new and novel ways.

James, a little bit about Brandywine Realty Trust for those who don't know, a little context.

Sure. So Brandywine is a commercial real estate REIT headquartered right here in Philadelphia. We have corporate offices in Philadelphia, Richmond, Washington, D.C. and down in Austin, Texas. Our portfolio is also in those same areas, although spread out into the various suburbs. It is an office and urban retail center REIT. So we have many offices, with maybe a restaurant in the first floor, some high rises and things of that nature. What's interesting about Brandywine and one of the things I really like about the company is they focus on their projects, interacting with the community. So being in the urban setting where there's offices, you have a lot of neighborhoods, retail centers and college campuses, all right around many of our locations. So the interaction with the tenants in the community is significant, significantly more than it was in the industrial REIT. Many times in the industrial REIT here, you have 1 million square foot warehouse in the middle of nowhere, right? And you're dealing with zoning and stuff like that, but you don't have the interaction with your community. Here at Brandywine, that's one of their core principles, it's really the interaction with the community.

Do you see the use of office space and mixed layouts changing dramatically going forward?

Yes, but not in the way that a lot of people maybe were fearful. So originally, this pandemic hit, and all of a sudden, it's -- offices are going to go away. Everyone's working remote. And I think what we all realized very quickly was we need a headquarters. We need some place to go to collaborate with people in person from time to time. So even those companies who are really embracing that remote work lifestyle, they see the need to really kind of gather from time to time. So many of the conversations we're having with existing tenants and potential future tenants now are how can we redesign our existing space to deal with the 6-foot safety net around us and be a little more healthier in the office. And that's leading to conversations of tenants who maybe have, we'll say, 20,000 square feet with this, maybe they need 25,000, right? Because they want to redesign things and they want to spread their folks out a little bit. We can all work remote as much as we have, I think it's worked out well. But some of these variables with family and pets and kids and everything else, it's a challenge when you're spreading that over a long course of time. So we're seeing good engagement with tenants on a better and smarter use of space going forward.

Excellent. James, thanks, stay with us. Jennifer, back over to you. When you think about the role of the CIO as a key player in the C-suite or the -- in the business, in the health care practice, how do you think the role will evolve from here and where is the opportunity? Where is the blessing in disguise here?

Sure. I think both internally and externally, the role of the CIO, it's now recognized probably more than ever as a transformation leader and not just the traditional view of this role being an operator. I think as CIOs we need to build upon this recent momentum and use this as a platform for further change, particularly given all of the uncertainty that we're facing right now. I'm guessing if, I could probably speak from many of my colleagues here, I'm saying that, we've really had to hone our skills and adaptations, and refine our skills and adaptation in recent months. And while this has certainly been exhausting at times, I think it's also very much a strength that we need to cultivate and grow. We can't return to the pre-COVID world of structured and sometimes rigid practices and policies that we follow. I think we need to recognize as a group, as a technology leadership team that we were successful. And in fact, we thrived by being agile and adaptive to the needs of our organizations, in my case, to the needs of our patient population. And this will be, I think, the critical success factor that CIOs will need to continue to be successful in the future.

Do you want to elaborate on that? That's a fascinating insight because I actually was on this as well. I think how you lead going forward through the pandemic, through this crisis, really defines you as your -- in your professional persona and your impacting your current role, but future opportunities and folks that leaned into it and really led into leaned in and led into it, really redefined their organization's impact as well as the future opportunity and role for them in the organization and their future career ascent.

Absolutely. In our case, and I think Larry mentioned it as well. The standard care delivery model historically has been bricks and mortar. With virtual care, it's just sort of a niche almost. My opinion is virtual care, telehealth will be the standard of care delivery in the future. That will be the common expectation for our patients, for us as members of our community. And so what we've seen in health care, and I guess and others can probably echo this is the role -- our role and certainly, the impact of our teams in driving that transformation, not in months, not in weeks, but usually days for most of us going from, I would say, double digits perhaps in virtual appointments to having thousands of virtual appointments and having to be able to support that technology infrastructure. More importantly, though, be able to support the totally redefined operating model that comes with that because it's not just the conference and collaboration tools, but if you think about it, it's all the processes that surround care delivery. That takes a broad understanding of the environment that we work in and a willingness to step forward and do things that might be outside of our kind of prior role. I mean, for example, I had a help desk, like many of us do, that primarily caters to workforce members, right? Work for -- and so we're used to our enterprise technologies, our enterprise tools that we support. But in the case of virtual care, you're now supporting a vastly larger number of consumer-grade technologies as well as a much higher degree of variation in competency as it relates to the use of the technology. So we have patients who aren't familiar with how to set up WiFi, who don't know how to access their e-mails, who really need a lot of support from a technology point of view. And again, in the past, there might have been a little bit of a resistance, I would say, to being able to take on that role, but we knew we had to step forward and embrace that position to be able to support our patients and our consumers in this entirely new world that we're living in of COVID.

Excellent. Thanks, Jennifer. Stay with us. James, why don't you turn your camera on as well, and we'll open it up. Larry you as well. Larry, when you think of the leadership lessons learned, what was the biggest lesson you learned in the past 3 months?

There's more than one, certainly. And I think the biggest thing is to listen first, this is not -- this isn't just for the past 3 months, but it's listen first, assess rapidly. And I -- and this goes to the first -- the past 3 months, assessed very, very rapidly what the need is and then determine and innovate a solution as fast as humanly possible. Jennifer just talked about the future of telemedicine. And we transitioned over 800 clinicians in a matter of 3 days from working solely face-to-face to working solely remotely in a telemedicine fashion. We did have some of the tools in place, but we didn't have the capacity. So we were doing massive change. And the key is keeping people focused and on target. This is not -- like I said, it's not about just what's in the past 3 months, it's keeping people focused on the prize. So it's really not a whole lot different from what you would do normally. Just the speed at which we are working is drastically, drastically increased.

Is telemedicine here to stay?

Absolutely. I don't think it's going away. It's -- if you're in the younger population, it's an expectation. But I think the -- even people of all ages have now gotten quite comfortable doing telemedicine, Zoom, just chatting with family members. So Garry, a testament to you and your company, it's super easy. And anything that's super easy to use, people will repeat, they'll talk about, and they'll be able to use it anywhere.

Excellent. Thanks, Larry. James, same question for you. Any kind of innovation that you've achieved over the past 120 days that's here to stay and you're going to extend it?

Well, certainly around the business processes and AI, right? What can be done that maybe before was a 10-step task, what can we automate. So I think automation has certainly jumped ahead from a priorities perspective from a how can we be more efficient in our business, and then bringing those tools to the forefront. So gone are the days of, for example, checking a box, right? To say, I need a DR plan or a business continuity plan, and it'd be nice if some of it was automated. Now with the crisis we're in now, we have to be able to, at a moment's notice, everybody go home. Everybody work somewhere else. Coworkers may not be available for a couple of weeks at a time, right? This isn't the far-flung example of somebody is no longer with us, what's our plan to replace that person. Now, it's several people could be down and out with an illness, right? So I think that the hopeful DR business continuity plans have got to be matured for the current state of affairs, and that's going to continue going forward. That's not going to change. That is the new way of thinking.

What does winning look like coming out of this? I know if you're a CEO in a for-profit business in health care, you're looking at building market share, building a customer engagement, right? But for a tech leader, what does winning look like in this model? Anyone want to jump in there?

Besides keeping just the lights on and keeping everything running and everybody connected and besides what you would call the basics, helping people use the technology more. I think someone used the words enablement, enabling the people to use the technology to the best of its ability. James has talked about AI and machine learning and being able to apply newer technologies, but it's all about enabling people, process and technology to perform better.

I would say agility and versatility are the keys to success moving forward. I mean, clearly, none of us could have predicted the circumstances we would be in today, 6 months ago or a year ago. And we, as technology leaders, have to be first one to respond and make a total 180 shift if needed in our strategy to be able to respond and react to preserve and hopefully grow the business going forward.

Great. James?

Yes. I think it's continuing to look at the new and innovative technologies that are out there and looking at them from a business use case perspective, not just looking at the new shiny object. We like it, let's get it implemented and let's plan them in and say that now all of a sudden, we're automated, and we're digitally transformed, right? Digital transformation doesn't come in a box. It doesn't come on a DVD. It is as much cultural and business process and people-oriented as it is technology-oriented.

Have you noticed any increased innovation just based on the platform and the technology of having Zoom or another video platform where you're not in person, and you have to get to an idea on a point quicker on a digital format than you would, if you were in a conference room for a day or 2 day session. Have you noticed that happened at all?

I think there's an increased comfort level from the majority of employees who maybe have not traditionally used collaboration tools in the past because there was not widespread work from home in some organizations. I think the various platforms made it very simple as part of their product to use their products. Zoom in particular, I'll throw Zoom, we're on here, right? So it's very much logical, whether you're on a phone, a tablet, a laptop, a couple of clicks and here we are talking with, what have we got, 72 participants here, right? It's been made very, very easy, that adoption rate. And without that adoption, that ease of adoption, I think we would have had all sorts of other problems when this thing end.

Can you imagine doing this kind of an event 10 years ago?

No. Right. Thanks, James, and Larry and Jennifer, a famous quote from the late Steve Jobs, right? Think differently. It's kind of our play on this, the conference team, reimagining the business and the nature of work. What has this allowed you to do, Larry, in terms of right now, where are you today and your thinking that you wouldn't possibly have been there 120 days ago? But today, you are now because we've walked through 120 days of hard work, maybe for some of us hell, and now you're looking forward to the future.

I mean we're looking at potentially, like this is a bit techy, but like more of a network redesign, trying to get -- to take more advantage of hybrid models where we can use more of our -- what's the new term from Gartner is, the secure edge. A secure access edge networking to be able to push more and take advantage of more of that distributed networking that we have out there, which lowers our cost. And allows people to work faster, better, cheaper and in extended worlds, even extending out your network into people's homes. And I think Jennifer mentioned also about having to provide support. So the more standardized we can make things, the easier it is to support. Helping that those help desks out in the world because it's -- everybody is different. Everybody has got their own setups everywhere. And then just making it easier, giving us the right tools, putting tools in the right places and allowing people to stay connected and collaborative because we're all distributed. And this pandemic stuff is probably not going to go away. It's probably not been the last time we see this even though we'd love to have it be the last time. But the fact of the matter is it's probably going to happen once, twice, maybe 3 or 4 more times in our lifetimes.

Thanks, Larry. Jennifer?

Yes. So I think that we'll -- yes. I think one of our key takeaways will be just the constant need to vigorously communicate and connect with our teams. And not just our teams, but our workforce and our executive colleagues. I know one of my key takeaways has been a reminder that we cannot overcommunicate during any time, but certainly a time of crisis. And we have to leverage all available channels, all tools we have. So certainly, the collaboration tools that we've talked about, have been tremendously helpful in that regard. But we need to have everything from e-mails to town hall events, chat, every -- all we can do to communicate the what, but really importantly, the why of what we're doing and the contributions we're making and really the future vision and strategy that our organization will follow.

0 Excellent. Thanks, Jennifer. James?

So I think one of the toughest things for any technologist is to start the conversation when you're introducing something new, right? Because one of the most frustrating responses we get is, well, this is the way we always do things. I think now that we've been through or are still going through this, that conversation goes away. Everybody kind of sees that there is a need to change things for the better and start to look a little differently. And I think one of the things we're seeing is everybody across every department is looking internally at themselves at their own groups and saying, how could we change things even if it's a little bit uncomfortable. And I think that drives innovation at a cultural level within our organization.

Anything keep you up at night, James, at this point?

Yes. Yes. So certainly, some of those core IT challenges with remote access and system availability, right? Because folks are now online honestly, a lot longer and all different hours. So your typical 9 to 5 workload model is not necessarily the same as an organization. So I think some of those traditional challenges still exist. And in some cases, are expanded.

Excellent. James, you still having fun?

Absolutely.

How important is fun?

Fun is -- it's probably 40% of the pie, right? It's a big piece. You got to have fun with your team, your coworkers, your peers.

So how do you do that in these really trying times?

Look, I'm from Philadelphia. I'm a diehard Philadelphia sports fan. So I know what letdown is even when you're having fun. So I think technologists are a rare breed. We kind of know how to have fun in some oddball ways, and we look at the bright side of things. And when we succeed, we share that amongst ourselves and our peers and everybody sees it as a success.

Thank, James. Jennifer, in case, can you still have fun in this kind of stressful environment?

Absolutely. Absolutely. In some respects, we probably connect even more frequently because now we're all working from home, and we all desire that connection more. So I find that the personal interactions I have, the team interactions I have. I think people are genuinely desiring that type of interpersonal connection and collaboration, whatever form it takes, whether it's the virtual happy hours we talked about or whether it's one-on-one meetings or town halls and so. I think we're having a lot of fun. I think we're really proud of what we've accomplished and excited about what we will do in the future.

Awesome. Thanks, Jennifer. Larry, final word?

It's Jennifer and James' comments have kind of captured all, but try to have some fun. If you can disconnect, I know everybody carries their cell phones they even go out for walks, trying not to text and walk now, like don't text and drive, try not to text and walk. But -- find some balance, if you can. So it's very important, both short and long term. And communicate, as Jennifer said, overcommunicate whether it's a town hall, whether it's just a team meeting, whether it's, say, these virtual lunches, happy hours, whatever it takes. Just keep people connected because you don't want them -- you want to -- just don't want them running amuck. You want people to feel loved, cared for, connected part of teams and -- because if you can still perform well when this distant, you'll be able to perform in anything.

Well said. Thanks, Larry. Jennifer, great job. James, great job. Larry, appreciate your engagement. Stay with us, if you can.

Will do.

Thank you.