Fourth Quarter 2011
 
 
 
 
 
 
 
 
 
Supplemental Operating and Financial Data
 
 
 
 
 
 
 
 
 
for the Quarter Ended December 31, 2011
 
 
 
 
 
 
 
 
 
Contact:
 
6110 Executive Boulevard
 
 
William T. Camp
 
 Suite 800
 
 
Executive Vice President and
 
Rockville, MD 20852
 
 
Chief Financial Officer
 
 (301) 984-9400
 
 
E-mail: bcamp@writ.com
 
(301) 984-9610 fax
 
 
 
 
 
 
 
 



 
 
 
 
 
 
 
 
 
 
Company Background and Highlights
 
 
 
 
 
Fourth Quarter 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Washington Real Estate Investment Trust ("WRIT") is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington metro region. WRIT is diversified, as it invests in office, medical office, retail, and multifamily properties and land for development.

2011 Highlights

In 2011 WRIT acquired a record $360 million of income-producing property: 1140 Connecticut Avenue and 1227 25th Street, two office assets in downtown Washington, DC; Olney Village Center, a grocery-anchored shopping center in the heart of Olney, Maryland; Braddock Metro Center, a four-building office campus located at the Braddock Metro in Alexandria, Virginia; and John Marshall II, an office property situated on a future Metro stop in Tysons Corner, Virginia. WRIT also completed the sale of its entire industrial portfolio along with three non-strategic office assets for total proceeds of $409 million and GAAP gains of approximately $97 million. WRIT entered into two joint ventures to develop 430 multifamily units at two excellent locations in the Ballston neighborhood of Arlington, Virginia and also in Alexandria, Virginia. Construction is expected to commence on both sites in late 2012.

WRIT posted same-store GAAP rental rate growth of 2.1% in 2011 and executed 1 million square feet of commercial lease transactions.

On the capital side, WRIT replaced and expanded one of its two credit facilities, increasing its size from $262 million to $400 million with an accordion feature that allows WRIT to increase the facility to $600 million, subject to additional lender commitments. The new facility matures July 1, 2014 with a one-year extension option and bears interest at a rate of LIBOR plus a margin of 122.5 basis points based on WRIT's current credit rating.

Fourth Quarter 2011 Update

WRIT announced a joint venture with Trammell Crow Company to develop a 15-story, 270 unit high-rise apartment community in Alexandria, Virginia. The joint venture purchased the proposed development site, a one-acre parcel located at 1219 First Street in Old Town Alexandria, Virginia. The project is within walking distance of the Braddock Road Metro Station and is in close proximity to Braddock Metro Center, the 345,000 square foot office campus purchased by WRIT in September 2011. The total cost of the project is estimated to be $95 million, with a projected stabilized return on cost between 7.0% and 8.0%. WRIT is the 95% equity partner and Trammell Crow is the 5% sponsor/developer partner. Construction is projected to commence in fourth quarter 2012 and will take approximately 24 months to complete. Stabilization is estimated by first quarter 2016.

WRIT completed the final two sale transactions of its industrial portfolio disposition. The two transactions totaled $115.1 million of sales proceeds and included Northern Virginia Industrial Park II, 6100 Columbia Park Road, and Dulles Business Park.

WRIT signed commercial leases for 264,000 square feet with an average lease term of 4.8 years. The average rental rate increase on new and renewal leases was 7.9% on a GAAP basis and -4.0% on a cash basis. Commercial tenant improvement costs were $17.09 per square foot and leasing costs were $10.29 per square foot for the quarter.

As of December 31, 2011, WRIT owned a diversified portfolio of 71 properties totaling approximately 9 million square feet of commercial space and 2,540 residential units, and land held for development. These 71 properties consist of 26 office properties, 18 medical office properties, 16 retail centers and 11 multifamily properties. WRIT shares are publicly traded on the New York Stock Exchange (NYSE: WRE).




 
 
 
 
 
 
 
 
 
 
Net Operating Income Contribution by Sector*
 
 
 
Fourth Quarter 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

With investments in the office, medical office, retail and multifamily segments, WRIT is uniquely diversified. Management believes this balanced portfolio provides stability during market fluctuations in specific property types.



Net Operating Income Contribution by Sector






Certain statements in our earnings release and on our conference call are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, the potential for federal government budget reductions, changes in general and local economic and real estate market conditions, the timing and pricing of lease transactions, the effect of the current credit and financial market conditions, the availability and cost of capital, fluctuations in interest rates, tenants' financial conditions, levels of competition, the effect of government regulation, the impact of newly adopted accounting principles, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2010 Form 10-K and third quarter 2011 Form 10-Q. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.




 
 
 
 
 
Supplemental Financial and Operating Data
Table of Contents
December 31, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Schedule
 
Page
 
 
 
 
 
 
Key Financial Data
 
 
 
 
Consolidated Statements of Operations
 
 
 
Consolidated Balance Sheets
 
 
 
Funds From Operations and Funds Available for Distribution
 
 
Adjusted Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
 
 
 
 
 
 
Capital Analysis
 
 
 
 
Long-Term Debt Analysis
 
 
 
Debt Covenant Compliance
 
 
 
Capital Analysis
 
 
 
 
 
 
 
Portfolio Analysis
 
 
 
 
Same-Store Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth
 
 
Same-Store Portfolio Net Operating Income (NOI) Detail for the Quarter
 
 
Same-Store Portfolio Net Operating Income (NOI) Detail for the Year
 
 
Net Operating Income (NOI) by Region
 
 
 
Same-Store Portfolio & Overall Physical Occupancy Levels by Sector
 
 
Same-Store Portfolio & Overall Economic Occupancy Levels by Sector
 
Tenant Analysis
 
 
 
 
Commercial Leasing Summary
 
 
 
10 Largest Tenants - Based on Annualized Base Rent
 
 
Industry Diversification
 
 
 
Lease expirations as of December 31, 2011
 
 
 
 
 
 
 
Growth and Strategy
 
 
 
 
2011 Acquisition and Disposition Summary
 
 
 
 
 
 
 
Appendix
 
 
 
 
Schedule of Properties
 
 
 
Supplemental Definitions
 
 





Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

 
 
Twelve Months Ended
 
Three Months Ended
OPERATING RESULTS
12/31/2011
 
12/31/2010
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
Real estate rental revenue
$
289,527

 
$
258,490

 
$
76,708

 
$
71,931

 
$
71,684

 
$
69,204

 
$
65,364

Real estate expenses
(97,192
)
 
(86,660
)
 
(26,068
)
 
(24,070
)
 
(23,801
)
 
(23,253
)
 
(21,033
)
 
192,335

 
171,830

 
50,640

 
47,861

 
47,883

 
45,951

 
44,331

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
(93,297
)
 
(80,066
)
 
(25,398
)
 
(23,479
)
 
(22,526
)
 
(21,894
)
 
(20,492
)
Income from real estate
99,038

 
91,764

 
25,242

 
24,382

 
25,357

 
24,057

 
23,839

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other income
1,144

 
1,193

 
258

 
270

 
310

 
306

 
318

Acquisition costs
(3,607
)
 
(1,161
)
 
(36
)
 
(1,600
)
 
(322
)
 
(1,649
)
 
(709
)
Gain from non-disposal activities
—

 
7

 
—

 
—

 
—

 
—

 
3

Real estate impairment
(14,526
)
 
—

 
(14,526
)
 
—

 
—

 
—

 
—

Gain (loss) on extinguishment of debt
(976
)
 
(9,176
)
 
(976
)
 
—

 
—

 
—

 
(8,896
)
Interest expense
(66,473
)
 
(67,229
)
 
(16,207
)
 
(16,508
)
 
(16,865
)
 
(16,893
)
 
(17,567
)
General and administrative
(15,728
)
 
(14,406
)
 
(4,140
)
 
(3,837
)
 
(4,049
)
 
(3,702
)
 
(3,951
)
Income (loss) from continuing operations
(1,128
)
 
992

 
(10,385
)
 
2,707

 
4,431

 
2,119

 
(6,963
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Income from operations of properties sold or held for sale
10,153

 
14,968

 
631

 
3,655

 
3,298

 
2,569

 
3,921

  Income tax benefit (expense)
(1,138
)
 
—

 
—

 
35

 
(1,173
)
 
—

 
—

  Gain on sale of real estate
97,491

 
21,599

 
40,852

 
56,639

 
—

 
—

 
13,657

Income from discontinued operations
106,506

 
36,567

 
41,483

 
60,329

 
2,125

 
2,569

 
17,578

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
105,378

 
37,559

 
31,098

 
63,036

 
6,556

 
4,688

 
10,615

Less: Net income from noncontrolling interests
(494
)
 
(133
)
 
(409
)
 
(28
)
 
(34
)
 
(23
)
 
(24
)
Net income attributable to the controlling interests
$
104,884

 
$
37,426

 
$
30,689

 
$
63,008

 
$
6,522

 
$
4,665

 
$
10,591

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to the controlling interests
$
1.58

 
$
0.60

 
$
0.46

 
$
0.95

 
$
0.10

 
$
0.07

 
$
0.16

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fully diluted weighted average shares outstanding
65,982

 
62,264

 
66,069

 
66,064

 
65,989

 
65,907

 
64,536

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
33.6
 %
 
33.5
%
 
34.0
 %
 
33.5
%
 
33.2
%
 
33.6
%
 
32.2
 %
General and administrative
5.4
 %
 
5.6
%
 
5.4
 %
 
5.3
%
 
5.6
%
 
5.3
%
 
6.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA / Interest expense
2.9x

 
2.8x

 
3.0x

 
2.9x

 
3.0x

 
2.8x

 
2.7x

Income (loss) from continuing operations attributable to the controlling interest/Total real estate revenue
(0.4
)%
 
0.4
%
 
(13.5
)%
 
3.8
%
 
6.2
%
 
3.1
%
 
(10.7
)%
Net income attributable to the controlling interest/Total real estate revenue
36.2
 %
 
14.5
%
 
40.0
 %
 
87.6
%
 
9.1
%
 
6.7
%
 
16.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Certain prior quarter amounts have been reclassified to conform to the current quarter presentation.
 
 

4



Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
Assets
 
 
 
 
 
 
 
 
 
Land
$
472,196

 
$
472,812

 
$
424,647

 
$
424,647

 
$
381,338

Income producing property
1,934,587

 
1,924,526

 
1,754,493

 
1,744,993

 
1,670,598

 
2,406,783

 
2,397,338

 
2,179,140

 
2,169,640

 
2,051,936

Accumulated depreciation and amortization
(535,732
)
 
(516,319
)
 
(497,738
)
 
(479,090
)
 
(460,678
)
Net income producing property
1,871,051

 
1,881,019

 
1,681,402

 
1,690,550

 
1,591,258

Development in progress, including land held for development
43,089

 
39,735

 
39,413

 
26,263

 
26,240

Total real estate held for investment, net
1,914,140

 
1,920,754

 
1,720,815

 
1,716,813

 
1,617,498

 
 
 
 
 
 
 
 
 
 
Investment in real estate held for sale, net
—

 
69,990

 
240,437

 
284,052

 
286,842

Cash and cash equivalents
12,765

 
40,751

 
42,886

 
12,480

 
78,767

Restricted cash
19,424

 
23,267

 
22,311

 
23,083

 
20,486

Rents and other receivables, net of allowance for doubtful accounts
53,828

 
52,396

 
48,472

 
46,864

 
44,280

Prepaid expenses and other assets
120,601

 
125,689

 
99,356

 
104,093

 
92,040

Other assets related to properties sold or held for sale
—

 
3,505

 
12,899

 
28,827

 
27,968

Total assets
$
2,120,758

 
$
2,236,352

 
$
2,187,176

 
$
2,216,212

 
$
2,167,881

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
Notes payable
$
657,470

 
$
657,378

 
$
659,934

 
$
753,692

 
$
753,587

Mortgage notes payable
427,710

 
428,909

 
360,493

 
361,189

 
361,860

Lines of credit/short-term note payable
99,000

 
193,000

 
245,000

 
160,000

 
100,000

Accounts payable and other liabilities
51,145

 
55,879

 
54,101

 
57,040

 
49,138

Advance rents
13,739

 
13,393

 
12,372

 
11,549

 
11,099

Tenant security deposits
8,862

 
8,751

 
8,027

 
8,024

 
7,390

Other liabilities related to properties sold or held for sale
—

 
19,229

 
24,528

 
24,902

 
23,949

Total Liabilities
1,257,926

 
1,376,539

 
1,364,455

 
1,376,396

 
1,307,023

 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
 
 
Shares of beneficial interest, $0.01 par value; 100,000 shares authorized
662

 
661

 
661

 
660

 
659

Additional paid-in capital
1,138,478

 
1,136,240

 
1,133,823

 
1,130,297

 
1,127,825

Distributions in excess of net income
(280,096
)
 
(281,930
)
 
(316,134
)
 
(293,860
)
 
(269,935
)
Accumulated other comprehensive income (loss)
—

 
(160
)
 
(636
)
 
(1,057
)
 
(1,469
)
Total shareholders' equity
859,044

 
854,811

 
817,714

 
836,040

 
857,080

Noncontrolling interests in subsidiaries
3,788

 
5,002

 
5,007

 
3,776

 
3,778

Total equity
862,832

 
859,813

 
822,721

 
839,816

 
860,858

Total liabilities and equity
$
2,120,758

 
$
2,236,352

 
$
2,187,176

 
$
2,216,212

 
$
2,167,881

 
 
 
 
 
 
 
 
 
 
Total Debt / Total Market Capitalization
0.40
:1
 
0.41
:1
 
0.37
:1
 
0.39
:1
 
0.38
:1



5



Funds from Operations and Funds Available for Distribution
(In thousands, except per share data)
(Unaudited)

 
 
Twelve Months Ended
 
Three Months Ended
 
12/31/2011
 
12/31/2010
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
Funds from operations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to the controlling interests
$
104,884

 
$
37,426

 
$
30,689

 
$
63,008

 
$
6,522

 
$
4,665

 
$
10,591

Real estate depreciation and amortization
93,297

 
80,066

 
25,398

 
23,479

 
22,526

 
21,894

 
20,492

Gain from non-disposal activities
—

 
(7
)
 
—

 
—

 
—

 
—

 
(3
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of real estate
(97,091
)
 
(21,599
)
 
(40,452
)
 
(56,639
)
 
—

 
—

 
(13,657
)
Income tax expense (benefit)
1,138

 
—

 
—

 
(35
)
 
1,173

 
—

 
—

Real estate impairment
599

 
—

 
—

 
—

 
—

 
599

 
—

Real estate depreciation and amortization
7,231

 
15,680

 
—

 
943

 
2,933

 
3,355

 
3,699

Funds from operations (FFO)
$
110,058

 
$
111,566

 
$
15,635

 
$
30,756

 
$
33,154

 
$
30,513

 
$
21,122

Loss (gain) on extinguishment of debt
976

 
9,176

 
976

 
—

 
—

 
—

 
8,896

Real estate impairment
14,526

 
—

 
14,526

 
—

 
—

 
—

 
—

Acquisition costs
3,607

 
1,161

 
36

 
1,600

 
322

 
1,649

 
709

Core FFO (1)
$
129,167

 
$
121,903

 
$
31,173

 
$
32,356

 
$
33,476

 
$
32,162

 
$
30,727

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
(712
)
 
(144
)
 
(186
)
 
(385
)
 
(38
)
 
(46
)
 
(47
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share - basic
$
1.66

 
$
1.79

 
$
0.23

 
$
0.46

 
$
0.50

 
$
0.46

 
$
0.33

FFO per share - fully diluted
$
1.66

 
$
1.79

 
$
0.23

 
$
0.46

 
$
0.50

 
$
0.46

 
$
0.33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core FFO per share - fully diluted
$
1.95

 
$
1.96

 
$
0.47

 
$
0.48

 
$
0.51

 
$
0.49

 
$
0.48

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds available for distribution(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO
$
110,058

 
$
111,566

 
$
15,635

 
$
30,756

 
$
33,154

 
$
30,513

 
$
21,122

Non-cash (gain)/loss on extinguishment of debt
—

 
3,202

 
—

 
—

 
—

 
—

 
2,922

Tenant improvements
(11,889
)
 
(13,579
)
 
(5,100
)
 
(2,469
)
 
(1,950
)
 
(2,370
)
 
(6,373
)
Leasing commissions and incentives
(8,692
)
 
(9,511
)
 
(1,485
)
 
(3,859
)
 
(1,116
)
 
(2,232
)
 
(2,089
)
Recurring capital improvements
(7,537
)
 
(5,938
)
 
(1,626
)
 
(2,148
)
 
(3,072
)
 
(691
)
 
(1,698
)
Straight-line rent, net
(2,734
)
 
(3,470
)
 
(776
)
 
(715
)
 
(586
)
 
(657
)
 
(951
)
Non-cash fair value interest expense
462

 
2,664

 
(53
)
 
145

 
191

 
179

 
345

Non-real estate depreciation and amortization
3,733

 
3,969

 
845

 
1,126

 
888

 
874

 
889

Amortization of lease intangibles, net
(1,052
)
 
(1,817
)
 
(32
)
 
(329
)
 
(413
)
 
(278
)
 
(437
)
Amortization and expensing of restricted share and unit compensation
5,580

 
5,852

 
1,459

 
1,376

 
1,488

 
1,257

 
1,553

Funds available for distribution (FAD)
$
87,929

 
$
92,938

 
$
8,867

 
$
23,883

 
$
28,584

 
$
26,595

 
$
15,283

Cash loss (gain) on extinguishment of debt
976

 
5,974

 
976

 
—

 
—

 
—

 
5,974

Real estate impairment
14,526

 
—

 
14,526

 
—

 
—

 
—

 
—

Acquisition costs
3,607

 
1,161

 
36

 
1,600

 
322

 
1,649

 
709

Core FAD (1)
$
107,038

 
$
100,073

 
$
24,405

 
$
25,483

 
$
28,906

 
$
28,244

 
$
21,966

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
(712
)
 
(144
)
 
(186
)
 
(385
)
 
(38
)
 
(46
)
 
(47
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FAD per share - basic
$
1.32

 
$
1.49

 
$
0.13

 
$
0.36

 
$
0.43

 
$
0.40

 
$
0.24

FAD per share - fully diluted
$
1.32

 
$
1.49

 
$
0.13

 
$
0.36

 
$
0.43

 
$
0.40

 
$
0.24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core FAD per share - fully diluted
$
1.61

 
$
1.60

 
$
0.37

 
$
0.38

 
$
0.44

 
$
0.43

 
$
0.34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common dividend per share
$
1.7350

 
$
1.7313

 
$
0.4338

 
$
0.4338

 
$
0.4338

 
$
0.4338

 
$
0.4338

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shares - basic
65,982

 
62,140

 
66,069

 
66,017

 
65,954

 
65,885

 
64,536

Average shares - fully diluted
65,982

 
62,264

 
66,069

 
66,064

 
65,989

 
65,907

 
64,536

(1) See "Supplemental Definitions" on page 28 of this supplemental for the definitions of FFO, Core FFO, FAD and Core FAD.
(2) Adjustment to the numerators for FFO, Core FFO, FAD and Core FAD per share calculations when applying the two-class method for calculating EPS.

6



Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
(In thousands)
(Unaudited)

 
Twelve Months Ended
 
Three Months Ended
 
12/31/2011
 
12/31/2010
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
Adjusted EBITDA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to the controlling interests
$
104,884

 
$
37,426

 
$
30,689

 
$
63,008

 
$
6,522

 
$
4,665

 
$
10,591

Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, including discontinued operations
66,947

 
68,979

 
15,985

 
16,739

 
17,097

 
17,126

 
17,801

Real estate depreciation and amortization, including discontinued operations
100,528

 
95,746

 
25,398

 
24,422

 
25,459

 
25,249

 
24,191

Income tax expense (benefit)
1,146

 
—

 
—

 
(27
)
 
1,173

 
—

 
—

Real estate impairment
15,125

 
—

 
14,526

 
—

 
—

 
599

 
—

Non-real estate depreciation
1,001

 
1,102

 
242

 
243

 
248

 
268

 
279

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
    Gain on sale of real estate
(97,091
)
 
(21,599
)
 
(40,452
)
 
(56,639
)
 
—

 
—

 
(13,657
)
    Loss (gain) on extinguishment of debt
976

 
9,176

 
976

 
—

 
—

 
—

 
8,896

    Gain from non-disposal activities
—

 
(7
)
 
—

 
—

 
—

 
—

 
(3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
$
193,516

 
$
190,823

 
$
47,364

 
$
47,746

 
$
50,499

 
$
47,907

 
$
48,098

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Adjusted EBITDA is earnings before interest expense, taxes, depreciation, amortization, gain on sale of real estate, gain/loss on extinguishment of debt and gain from non-disposal activities. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure.


7



Long Term Debt Analysis
(In thousands, except per share data)
 

 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
Balances Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Conventional fixed rate
$
427,710

 
$
446,715

 
$
378,469

 
$
379,333

 
$
380,171

Secured total
427,710

 
446,715

 
378,469

 
379,333

 
380,171

Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds and notes
657,470

 
657,378

 
659,934

 
753,692

 
753,587

Credit facility
99,000

 
193,000

 
245,000

 
160,000

 
100,000

Unsecured total
756,470

 
850,378

 
904,934

 
913,692

 
853,587

Total
$
1,184,180

 
$
1,297,093

 
$
1,283,403

 
$
1,293,025

 
$
1,233,758

 
 
 
 
 
 
 
 
 
 
Average Interest Rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Conventional fixed rate
5.9
%
 
5.9
%
 
5.9
%
 
5.9
%
 
5.9
%
Secured total
5.9
%
 
5.9
%
 
5.9
%
 
5.9
%
 
5.9
%
Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds
5.4
%
 
5.4
%
 
5.4
%
 
5.4
%
 
5.4
%
Credit facilities
0.9
%
 
2.1
%
 
1.4
%
 
1.8
%
 
2.5
%
Unsecured total
4.8
%
 
4.6
%
 
4.3
%
 
4.8
%
 
5.1
%
Average
5.2
%
 
5.1
%
 
4.8
%
 
5.1
%
 
5.4
%

Note: The current balances outstanding of the secured and unsecured fixed rate bonds and notes are shown net of discounts/premiums in the amount of $4.5 million and $2.5 million, respectively.


    

8



Long Term Debt Analysis
(In thousands, except per share amounts)
 
 


 
 
Future Maturities of Debt
Year
 
Secured Debt
 
Unsecured Debt
 
Credit Facilities
 
Total Debt
 
Average Interest Rate
2012
 
$
27,000

 
$
50,000

 
74,000

 
$
151,000

 
3.0%
2013
 
87,580

 
60,000

 
—

 
147,580

 
5.4%
2014
 
3,724

 
100,000

 
25,000

 
128,724

 
4.6%
2015
 
22,390

 
150,000

 
—

 
172,390

 
5.4%
2016
 
134,943

 
—

 
—

 
134,943

 
5.7%
2017
 
104,953

 
—

 
—

 
104,953

 
7.2%
2018
 
3,277

 
—

 
—

 
3,277

 
5.1%
2019
 
34,060

 
—

 
—

 
34,060

 
5.3%
2020
 
2,818

 
250,000

 
—

 
252,818

 
5.1%
2021
 
2,997

 
—

 
—

 
2,997

 
5.1%
2022
 
3,187

 
—

 
—

 
3,187

 
5.1%
Thereafter
 
5,256

 
50,000

 
—

 
55,256

 
7.2%
Total maturities
 
$
432,185

 
$
660,000

 
$
99,000

 
$
1,191,185

 
5.2%
                
Weighted average maturity = 5.0 years

                

9



Debt Covenant Compliance
 

 
Unsecured Notes Payable
 
Unsecured Line of Credit #1
($75.0 million)
 
Unsecured Line of Credit #2
($400.0 million)
 
Quarter Ended December 31, 2011
 
Covenant
 
Quarter Ended December 31, 2011
 
Covenant
 
Quarter Ended December 31, 2011
 
Covenant
 
 
 
 
 
 
 
 
 
 
 
 
% of Total Indebtedness to Total Assets(1)
41.0
%
 
≤ 65.0%
 
 N/A

 
N/A
 
 N/A

 
N/A
Ratio of Income Available for Debt Service to Annual Debt Service
3.1

 
≥ 1.5
 
 N/A

 
N/A
 
 N/A

 
N/A
% of Secured Indebtedness to Total Assets(1)
14.8
%
 
≤ 40.0%
 
 N/A

 
N/A
 
 N/A

 
N/A
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness
2.8

 
≥ 1.5
 
 N/A

 
N/A
 
 N/A

 
N/A
Tangible Net Worth(3)
 N/A

 
N/A
 

$1.1 billion

 
≥ $808.6 million
 

$843.0 million

 
≥ $671.9 million
% of Total Liabilities to Gross Asset Value(5)
 N/A

 
N/A
 
50.3
%
 
≤ 60.0%
 
48.7
%
 
≤ 60.0%
% of Secured Indebtedness to Gross Asset Value(5)
 N/A

 
N/A
 
17.1
%
 
≤ 35.0%
 
16.6
%
 
≤ 35.0%
Ratio of EBITDA(4) to Fixed Charges(6)
 N/A

 
N/A
 
2.58

 
≥ 1.75
 
2.58

 
≥ 1.50
Ratio of Unencumbered Pool Value(8) to Unsecured Indebtedness
 N/A

 
N/A
 
2.47

 
≥ 1.67
 
2.48

 
≥ 1.67
Ratio of Unencumbered Net Operating Income to Unsecured Interest Expense
 N/A

 
N/A
 
 N/A

 
N/A
 
3.56

 
≥ 2.00
% of Development in Progress to Gross Asset Value(5)
 N/A

 
N/A
 
1.7
%
 
≤ 30.0%
 
 N/A

 
N/A
% of Non-Wholly Owned Assets(7) to Gross Asset Value(5)
 N/A

 
N/A
 
0.8
%
 
≤ 15.0%
 
 N/A

 
N/A
Ratio of Investments(9) to Gross Asset Value(5)
 N/A

 
N/A
 
 N/A

 
N/A
 
1.7
%
 
≤ 15.0%
 
 
 
 
 
 
 
 
 
 
 
 
(1) Total Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties.
(2) Total Unencumbered Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from unencumbered properties from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties.
(3) Tangible Net Worth is defined as shareholders equity less accumulated depreciation at the commitment start date plus current accumulated depreciation.
(4) EBITDA is defined in our debt covenants as earnings before minority interests, depreciation, amortization, interest expense, income tax expense, and extraordinary and nonrecurring gains and losses.
(5) Gross Asset Value is calculated by applying a capitalization rate to the annualized EBITDA(4) from the most recently ended quarter, excluding EBITDA from disposed properties and current quarter acquisitions. To this amount, the purchase price of current quarter acquisitions, cash and cash equivalents and development in progress is added.
(6) Fixed Charges consist of interest expense, principal payments, ground lease payments and replacement reserve payments.
(7) Non-Wholly Owned Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from properties subject to a joint operating agreement (i.e. NVIP I&II). We add to this amount the development in progress subject to a joint operating agreement (i.e. 4661 Kenmore Avenue).
(8) Unencumbered Pool Value is calculated by applying a capitalization rate of 7.75% to the net operating income from unencumbered properties owned for the entire quarter. To this we add the purchase price of unencumbered acquisitions during the current quarter and, for Unsecured Line of Credit #1 only, development in progress.
(9) Investments is defined as development in progress, including land held for development, plus budgeted development costs upon commencement of construction, if any.

10


        

Capital Analysis
(In thousands, except per share amounts)
 
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
Market Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares Outstanding
66,265

 
66,066

 
66,017

 
65,941

 
65,870

Market Price per Share
$
27.35

 
$
28.18

 
$
32.52

 
$
31.09

 
$
30.99

Equity Market Capitalization
$
1,812,348

 
$
1,861,740

 
$
2,146,873

 
$
2,050,106

 
$
2,041,311

 
 
 
 
 
 
 
 
 
 
Total Debt
$
1,184,180

 
$
1,297,093

 
$
1,283,403

 
$
1,293,025

 
$
1,233,758

Total Market Capitalization
$
2,996,528

 
$
3,158,833

 
$
3,430,276

 
$
3,343,131

 
$
3,275,069

 
 
 
 
 
 
 
 
 
 
Total Debt to Market Capitalization
0.40
:1
 
0.41
:1
 
0.37
:1
 
0.39
:1
 
0.38
:1
 
 
 
 
 
 
 
 
 
 
Earnings to Fixed Charges(1)
0.3x

 
1.1x

 
1.3x

 
1.1x

 
0.6x

Debt Service Coverage Ratio(2)
2.7x

 
2.7x

 
2.8x

 
2.6x

 
2.5x

 
 
 
 
 
 
 
 
 
 
Dividend Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Dividends Paid
$
28,669

 
$
28,641

 
$
28,621

 
$
28,587

 
$
28,438

Common Dividend per Share
$
0.43

 
$
0.43

 
$
0.43

 
$
0.43

 
$
0.43

Payout Ratio (Core FFO per share basis)
92.3
%
 
90.4
%
 
85.0
%
 
88.5
%
 
90.4
%
Payout Ratio (Core FAD per share basis)
117.2
%
 
114.1
%
 
98.6
%
 
100.9
%
 
127.6
%
Payout Ratio (FAD per share basis)
333.7
%
 
120.5
%
 
100.9
%
 
108.4
%
 
180.7
%

(1) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations attributable to the controlling interests plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized.

(2) Debt service coverage ratio is computed by dividing Adjusted EBITDA (see page 7) by interest expense and principal amortization.


11



Same-Store Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth
2011 vs. 2010

 
 
Three Months Ended December 31, (1)
 
Twelve Months Ended December 31, (2)
 
 
2011
 
2010
 
% Change
 
Rental Rate Growth
 
2011
 
2010
 
% Change
 
Rental Rate Growth
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
$
7,838

 
$
7,386

 
6.1
 %
 
4.6
%
 
$
30,464

 
$
28,550

 
6.7
 %
 
4.0
%
Office Buildings
 
20,209

 
20,006

 
1.0
 %
 
1.9
%
 
75,398

 
74,157

 
1.7
 %
 
2.1
%
Medical Office Buildings
 
7,483

 
7,643

 
(2.1
)%
 
3.1
%
 
30,022

 
29,924

 
0.3
 %
 
3.2
%
Retail Centers
 
7,080

 
7,353

 
(3.7
)%
 
2.7
%
 
28,716

 
29,808

 
(3.7
)%
 
1.5
%
Overall Same-Store Portfolio
 
$
42,610

 
$
42,388

 
0.5
 %
 
2.7
%
 
$
164,600

 
$
162,439

 
1.3
 %
 
2.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
$
8,033

 
$
7,589

 
5.9
 %
 
4.5
%
 
$
31,262

 
$
29,356

 
6.5
 %
 
4.0
%
Office Buildings
 
20,631

 
20,930

 
(1.4
)%
 
0.7
%
 
77,187

 
77,818

 
(0.8
)%
 
1.0
%
Medical Office Buildings
 
7,707

 
7,877

 
(2.2
)%
 
2.9
%
 
30,983

 
30,744

 
0.8
 %
 
3.4
%
Retail Centers
 
6,953

 
7,507

 
(7.4
)%
 
2.2
%
 
28,849

 
30,196

 
(4.5
)%
 
1.5
%
Overall Same-Store Portfolio
 
$
43,324

 
$
43,903

 
(1.3
)%
 
2.0
%
 
$
168,281

 
$
168,114

 
0.1
 %
 
2.1
%
(1) Non same-store properties were:
Acquisitions:
Office - 1140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II.
Retail - Gateway Overlook, Olney Village Center.
Medical Office - Lansdowne Medical Office Building.    
Held for sale and sold properties:
Office - Dulles Station, Phase I.
Industrial/Office - Industrial Portfolio (see Supplemental Definitions for list of properties).

(2) Non same-store properties were:
Acquisitions:
Office - Quantico Corporate Center, 1140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II.
Retail - Gateway Overlook, Olney Village Center.
Medical Office - Lansdowne Medical Office Building.    
Held for sale and sold properties:
Office - Parklawn Plaza, Lexington, Saratoga, Ridges, and Dulles Station, Phase I.
Industrial/Office - Charleston, Ammendale I & II, Amvax, and the Industrial Portfolio (see Supplemental Definitions for list of properties).


12



Same-Store Portfolio Net Operating Income (NOI) Detail
(In thousands)
 
 
Three Months Ended December 31, 2011
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Industrial/Flex
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
12,906

 
$
31,111

 
$
11,057

 
$
10,218

 
$
—

 
—

 
$
65,292

Non same-store - acquired and in development(1)
—

 
7,898

 
199

 
3,319

 
—

 
—

 
11,416

                         Total
12,906

 
39,009

 
11,256

 
13,537

 
—

 
—

 
76,708

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
4,873

 
10,480

 
3,350

 
3,265

 
—

 
—

 
21,968

Non same-store - acquired and in development(1)
—

 
3,174

 
146

 
780

 
—

 
—

 
4,100

                         Total
4,873

 
13,654

 
3,496

 
4,045

 
—

 
—

 
26,068

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
8,033

 
20,631

 
7,707

 
6,953

 
—

 
—

 
43,324

Non same-store - acquired and in development(1)
—

 
4,724

 
53

 
2,539

 
—

 
—

 
7,316

                          Total
$
8,033

 
$
25,355

 
$
7,760

 
$
9,492

 
$
—

 
—

 
$
50,640

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
8,033

 
$
20,631

 
$
7,707

 
$
6,953

 
$
—

 
—

 
$
43,324

Straight-line revenue, net for same-store properties
(3
)
 
(387
)
 
(145
)
 
129

 
—

 
—

 
(406
)
FAS 141 Min Rent
(192
)
 
(155
)
 
(89
)
 
(78
)
 
—

 
—

 
(514
)
Amortization of lease intangibles for same-store properties
—

 
120

 
10

 
76

 
—

 
—

 
206

Same-store portfolio NOI, cash basis
$
7,838

 
$
20,209

 
$
7,483

 
$
7,080

 
$
—

 
—

 
$
42,610

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income
 
 
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
8,033

 
$
25,355

 
$
7,760

 
$
9,492

 
$
—

 
—

 
$
50,640

Other income
—

 
—

 
—

 
—

 
—

 
258

 
258

Acquisition costs
—

 
—

 
—

 
—

 
—

 
(36
)
 
(36
)
Interest expense
(1,717
)
 
(3,077
)
 
(1,188
)
 
(611
)
 
—

 
(9,614
)
 
(16,207
)
Depreciation and amortization
(3,175
)
 
(14,611
)
 
(3,856
)
 
(3,539
)
 
—

 
(217
)
 
(25,398
)
General and administrative
—

 
—

 
—

 
—

 
—

 
(4,140
)
 
(4,140
)
Real estate impairment
—

 
—

 
—

 
—

 
—

 
(14,526
)
 
(14,526
)
Loss of Extinguishment of debt
—

 
—

 
—

 
—

 
—

 
(976
)
 
(976
)
Gain on non disposal
—

 
—

 
—

 
—

 
—

 
—

 
—

Discontinued operations(2)
—

 
10

 
—

 
—

 
621

 
—

 
631

Income tax benefit (expense)
—

 
—

 
—

 
—

 
—

 
—

 
—

Gain on sale of real estate
—

 
—

 
—

 
—

 
—

 
40,852

 
40,852

Net Income
3,141

 
7,677

 
2,716

 
5,342

 
621

 
11,601

 
31,098

Net income attribuatble to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
(409
)
 
(409
)
Net income attributable to the controlling interests
$
3,141

 
$
7,677

 
$
2,716

 
$
5,342

 
$
621

 
$
11,192

 
$
30,689

(1) Non same-store properties were:
Acquisitions:
Office - 1140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II.
Retail - Gateway Overlook, Olney Village Center.
Medical Office - Lansdowne Medical Office Building.

(2) Discontinued operations included the following held for sale and sold properties:
Office - Dulles Station, Phase I and The Ridges
Industrial/Office - Ammendale I & II, Amvax and Industrial Portfolio (see Supplemental Definitions for list of properties).


13



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
Three Months Ended December 31, 2010
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Industrial/Flex
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
12,407

 
$
31,187

 
$
11,279

 
$
9,810

 
$
—

 
—

 
$
64,683

Non same-store - acquired and in development(1)
—

 
—

 
54

 
627

 
—

 
—

 
681

                         Total
12,407

 
31,187

 
11,333

 
10,437

 
—

 
—

 
65,364

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
4,818

 
10,257

 
3,402

 
2,303

 
—

 
—

 
20,780

Non same-store - acquired and in development(1)
—

 
—

 
123

 
130

 
—

 
—

 
253

                         Total
4,818

 
10,257

 
3,525

 
2,433

 
—

 
—

 
21,033

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
7,589

 
20,930

 
7,877

 
7,507

 
—

 
—

 
43,903

Non same-store - acquired and in development(1)
—

 
—

 
(69
)
 
497

 
—

 
—

 
428

                          Total
$
7,589

 
$
20,930

 
$
7,808

 
$
8,004

 
$
—

 
—

 
$
44,331

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
7,589

 
$
20,930

 
$
7,877

 
$
7,507

 
$
—

 
—

 
$
43,903

Straight-line revenue, net for same-store properties
(12
)
 
(680
)
 
(145
)
 
(89
)
 
—

 
—

 
(926
)
FAS 141 Min Rent
(191
)
 
(293
)
 
(98
)
 
(80
)
 
—

 
—

 
(662
)
Amortization of lease intangibles for same-store properties
—

 
49

 
9

 
15

 
—

 
—

 
73

Same-store portfolio NOI, cash basis
$
7,386

 
$
20,006

 
$
7,643

 
$
7,353

 
$
—

 
—

 
$
42,388

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income
 
 
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
7,589

 
$
20,930

 
$
7,808

 
$
8,004

 
$
—

 
—

 
$
44,331

Other income
—

 
—

 
—

 
—

 
—

 
318

 
318

Acquisition costs
—

 
—

 
—

 
—

 
—

 
(709
)
 
(709
)
Interest expense
(1,725
)
 
(2,270
)
 
(1,347
)
 
(322
)
 
—

 
(11,903
)
 
(17,567
)
Depreciation and amortization
(3,312
)
 
(10,945
)
 
(3,939
)
 
(1,971
)
 
—

 
(325
)
 
(20,492
)
General and administrative
—

 
—

 
—

 
—

 
—

 
(3,951
)
 
(3,951
)
Loss on extinguishment of debt
—

 
—

 
—

 
—

 
—

 
(8,896
)
 
(8,896
)
Gain from non-disposal activities
—

 
—

 
—

 
—

 
—

 
3

 
3

Discontinued operations(2)
—

 
607

 
—

 
—

 
3,314

 
—

 
3,921

Gain on sale of real estate
—

 
—

 
—

 
—

 
—

 
13,657

 
13,657

Net income
2,552

 
8,322

 
2,522

 
5,711

 
3,314

 
(11,806
)
 
10,615

Net income attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
(24
)
 
(24
)
Net income attributable to the controlling interests
$
2,552

 
$
8,322

 
$
2,522

 
$
5,711

 
$
3,314

 
$
(11,830
)
 
$
10,591

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Non same-store properties were:
Acquisitions:
Office - Quantico Corporate Center
Retail - Gateway Overlook
Medical Office - Lansdowne Medical Office Building.

(2) Discontinued operations included the following held for sale and sold properties:
Office - Dulles Station, Phase I and The Ridges
Industrial/Office - Ammendale I & II, Amvax and the Industrial Portfolio (see Supplemental Definitions for list of properties).


14



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
Twelve Months Ended December 31, 2011
 
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Industrial/Flex
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
 
$
50,979

 
$
117,161

 
$
44,627

 
$
40,872

 
$
—

 
—

 
$
253,639

Non same-store - acquired and in development 1
 
—

 
25,709

 
630

 
9,549

 
—

 
—

 
35,888

                         Total
 
50,979

 
142,870

 
45,257

 
50,421

 
—

 
—

 
289,527

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
 
19,717

 
39,974

 
13,644

 
12,023

 
—

 
—

 
85,358

Non same-store - acquired and in development 1
 
—

 
8,986

 
598

 
2,250

 
—

 
—

 
11,834

                         Total
 
19,717

 
48,960

 
14,242

 
14,273

 
—

 
—

 
97,192

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
 
31,262

 
77,187

 
30,983

 
28,849

 
—

 
—

 
168,281

Non same-store - acquired and in development 1
 
—

 
16,723

 
32

 
7,299

 
—

 
—

 
24,054

                          Total
 
$
31,262

 
$
93,910

 
$
31,015

 
$
36,148

 
$
—

 
—

 
$
192,335

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
 
$
31,262

 
$
77,187

 
$
30,983

 
$
28,849

 
$
—

 
—

 
$
168,281

Straight-line revenue, net for same-store properties
 
(32
)
 
(1,111
)
 
(617
)
 
84

 
—

 
—

 
(1,676
)
FAS 141 Min Rent
 
(766
)
 
(1,164
)
 
(383
)
 
(342
)
 
—

 
—

 
(2,655
)
Amortization of lease intangibles for same-store properties
 
—

 
486

 
39

 
125

 
—

 
—

 
650

Same-store portfolio NOI, cash basis
 
$
30,464

 
$
75,398

 
$
30,022

 
$
28,716

 
$
—

 
—

 
$
164,600

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to Net Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total NOI
 
$
31,262

 
$
93,910

 
$
31,015

 
$
36,148

 
$
—

 
—

 
$
192,335

Other income
 
—

 
—

 
—

 
—

 
—

 
1,144

 
1,144

Acquisition costs
 
—

 
—

 
—

 
—

 
—

 
(3,607
)
 
(3,607
)
Interest expense
 
(6,824
)
 
(9,957
)
 
(5,071
)
 
(1,653
)
 
—

 
(42,968
)
 
(66,473
)
Depreciation and amortization
 
(12,620
)
 
(51,644
)
 
(15,483
)
 
(12,158
)
 
—

 
(1,392
)
 
(93,297
)
General and administrative
 
—

 
—

 
—

 
—

 
—

 
(15,728
)
 
(15,728
)
Real estate impairment
 
—

 
—

 
—

 
—

 
—

 
(14,526
)
 
(14,526
)
Gain (loss) on extinguishment of debt
 
—

 
—

 
—

 
—

 
—

 
(976
)
 
(976
)
Gain on non disposal
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Discontinued operations 2
 
—

 
107

 
—

 
—

 
10,046

 
—

 
10,153

Gain on sale of real estate
 
—

 
—

 
—

 
—

 
—

 
97,491

 
97,491

Income tax expense on sale of real estate
 
—

 
—

 
—

 
—

 
—

 
(1,138
)
 
(1,138
)
Net Income
 
11,818

 
32,416

 
10,461

 
22,337

 
10,046

 
18,300

 
105,378

Net income attributable to noncontrolling interests
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(494
)
 
$
(494
)
Net income attributable to the controlling interests
 
11,818

 
32,416

 
10,461

 
22,337

 
10,046

 
17,806

 
104,884

(1) Non same-store properties were:
Acquisitions:
Office - Quantico Corporate Center, 1140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II.
Retail - Gateway Overlook, Olney Village Center.
Medical Office - Lansdowne Medical Office Building.

(2) Discontinued operations included the following held for sale and sold properties:
Office - Parklawn Plaza, Saratoga , Lexington, The Ridges, Dulles Station, Phase I.
Industrial/Office - Charleston Business Center, Ammendale I&II, Amvax and the Industrial Portfolio (see Supplemental Definitions for list of properties).



15



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
 
Twelve Months Ended December 31, 2010
 
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Industrial/Flex
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
 
48,599

 
118,913

 
44,949

 
40,376

 
—

 
—

 
252,837

Non same-store - acquired and in development 1
 
—

 
4,947

 
79

 
627

 
—

 
—

 
5,653

                         Total
 
48,599

 
123,860

 
45,028

 
41,003

 
—

 
—

 
258,490

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
 
19,243

 
41,095

 
14,205

 
10,180

 
—

 
—

 
84,723

Non same-store - acquired and in development 1
 
—

 
1,297

 
510

 
130

 
—

 
—

 
1,937

                         Total
 
19,243

 
42,392

 
14,715

 
10,310

 
—

 
—

 
86,660

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
 
29,356

 
77,818

 
30,744

 
30,196

 
—

 
—

 
168,114

Non same-store - acquired and in development 1
 
—

 
3,650

 
(431
)
 
497

 
—

 
—

 
3,716

                          Total
 
29,356

 
81,468

 
30,313

 
30,693

 
—

 
—

 
171,830

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
 
29,356

 
77,818

 
30,744

 
30,196

 
—

 
—

 
168,114

Straight-line revenue, net for same-store properties
 
(40
)
 
(2,208
)
 
(447
)
 
(109
)
 
—

 
—

 
(2,804
)
FAS 141 Min Rent
 
(766
)
 
(1,607
)
 
(401
)
 
(323
)
 
—

 
—

 
(3,097
)
Amortization of lease intangibles for same-store properties
 
—

 
154

 
28

 
44

 
—

 
—

 
226

Same-store portfolio NOI, cash basis
 
28,550

 
74,157

 
29,924

 
29,808

 
—

 
—

 
162,439

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to Net Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total NOI
 
29,356

 
81,468

 
30,313

 
30,693

 
—

 
—

 
171,830

Other income
 
—

 
—

 
—

 
—

 
—

 
1,193

 
1,193

Acquisition costs
 
—

 
—

 
—

 
—

 
—

 
(1,161
)
 
(1,161
)
Interest expense
 
(6,853
)
 
(9,039
)
 
(5,391
)
 
(1,287
)
 
—

 
(44,659
)
 
(67,229
)
Depreciation and amortization
 
(13,635
)
 
(42,301
)
 
(15,514
)
 
(7,314
)
 
—

 
(1,302
)
 
(80,066
)
General and administrative
 
—

 
—

 
—

 
—

 
—

 
(14,406
)
 
(14,406
)
Gain (loss) on extinguishment of debt
 
—

 
—

 
—

 
—

 
—

 
(9,176
)
 
(9,176
)
Gain on non disposal
 
—

 
—

 
—

 
—

 
—

 
7

 
7

Discontinued operations 2
 
—

 
1,968

 
—

 
—

 
13,000

 
—

 
14,968

Gain on sale of real estate
 
—

 
—

 
—

 
—

 
—

 
21,599

 
21,599

Income tax expense on sale of real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Net Income
 
8,868

 
32,096

 
9,408

 
22,092

 
13,000

 
(47,905
)
 
37,559

Net income attributable to noncontrolling interests
 
—

 
—

 
—

 
—

 
—

 
(133
)
 
(133
)
Net income attributable to the controlling interests
 
8,868

 
32,096

 
9,408

 
22,092

 
13,000

 
(48,038
)
 
37,426

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1) Non same-store properties were:
Acquisitions:
Office - Quantico Corporate Center
Retail - Gateway Overlook
Medical Office - Lansdowne Medical Office Building.

(2) Discontinued operations included the following held for sale and sold properties:
Office - Parklawn Plaza, Saratoga , Lexington, The Ridges, Dulles Station, Phase I.
Industrial/Office - Charleston Business Center, Ammendale I&II, Amvax and the Industrial Portfolio (see Supplemental Definitions for list of properties).


16



Net Operating Income (NOI) by Region
 
 
 
 
 
 
 
 
 
 
 
 
WRIT Portfolio
 
WRIT Portfolio
Maryland/Virginia/DC
 
Inside & Outside the Beltway
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of
Q4 2011 GAAP NOI
 
Percentage of
YTD 2011 GAAP NOI
 
 
 
Percentage of
Q4 2011 GAAP NOI
 
Percentage of
YTD 2011 GAAP NOI
 
 
 
 
 
 
 
 
 
 
 
DC
 
 
 
 
 
Inside the Beltway
 
 
Multifamily
 
3.8
%
 
4.0
%
 
Multifamily
 
15.0
%
 
15.4
%
Office
 
17.6
%
 
19.2
%
 
Office
 
27.0
%
 
26.5
%
Medical Office
 
1.7
%
 
1.9
%
 
Medical Office
 
3.0
%
 
3.2
%
Retail
 
0.7
%
 
0.7
%
 
Retail
 
6.3
%
 
6.6
%
 
 
23.8
%
 
25.8
%
 
 
 
51.3
%
 
51.7
%
 
 
 
 
 
 
 
 
 
 
 
Maryland
 
 
 
 
 
Outside the Beltway
 
 
Multifamily
 
2.6
%
 
2.5
%
 
Multifamily
 
0.8
%
 
0.9
%
Office
 
11.5
%
 
12.4
%
 
Office
 
23.1
%
 
22.2
%
Medical Office
 
4.4
%
 
4.6
%
 
Medical Office
 
12.3
%
 
13.0
%
Retail
 
12.9
%
 
12.3
%
 
Retail
 
12.5
%
 
12.2
%
 
 
31.4
%
 
31.8
%
 
 
 
48.7
%
 
48.3
%
 
 
 
 
 
 
 
 
 
 
 
Virginia
 
 
 
 
 
Total Portfolio
 
100.0
%
 
100.0
%
Multifamily
 
9.5
%
 
9.8
%
 
 
 
 
 
 
Office
 
21.0
%
 
17.2
%
 
 
 
 
 
 
Medical Office
 
9.2
%
 
9.6
%
 
 
 
 
 
 
Retail
 
5.1
%
 
5.8
%
 
 
 
 
 
 
 
 
44.8
%
 
42.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio
 
100.0
%
 
100.0
%
 
 
 
 
 
 

17



Same-Store and Overall Physical Occupancy Levels by Sector


 
 
Physical Occupancy - Same-Store Properties (1)
Sector
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.9
%
 
94.0
%
 
95.6
%
 
95.3
%
 
95.7
%
Office Buildings
 
88.8
%
 
88.1
%
 
88.4
%
 
89.3
%
 
89.4
%
Medical Office Buildings
 
90.6
%
 
91.3
%
 
91.7
%
 
93.5
%
 
93.8
%
Retail Centers
 
93.0
%
 
91.8
%
 
92.3
%
 
92.2
%
 
92.5
%
Industrial / Flex
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
91.3
%
 
90.7
%
 
91.3
%
 
91.8
%
 
92.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Physical Occupancy - All Properties
Sector
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.9
%
 
94.0
%
 
95.6
%
 
95.3
%
 
95.7
%
Office Buildings
 
89.0
%
 
88.6
%
 
88.1
%
 
89.1
%
 
89.4
%
Medical Office Buildings
 
86.5
%
 
87.2
%
 
87.3
%
 
88.3
%
 
88.5
%
Retail Centers
 
93.3
%
 
92.3
%
 
92.0
%
 
92.0
%
 
92.1
%
Industrial / Flex
 
—
%
 
75.4
%
 
78.4
%
 
80.2
%
 
78.6
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
90.8
%
 
89.0
%
 
87.7
%
 
88.5
%
 
88.3
%

(1) Non same-store properties were:
Acquisitions:
Office - 1140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II.
Retail - Gateway Overlook, Olney Village Center.
Medical Office - Lansdowne Medical Office Building.    
Held for sale and sold properties:
Office - The Ridges.
Industrial/Office - Ammendale I & II, Amvax and the Industrial Portfolio (see Supplemental Definitions for list of properties).


18



Same-Store Portfolio and Overall Economic Occupancy Levels by Sector
 
 
Economic Occupancy - Same-Store Properties(1)
Sector
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.2
%
 
94.1
%
 
94.9
%
 
94.8
%
 
95.5
%
Office Buildings
 
89.8
%
 
89.2
%
 
90.2
%
 
90.3
%
 
89.7
%
Medical Office Buildings
 
92.4
%
 
92.8
%
 
94.0
%
 
94.2
%
 
94.5
%
Retail Centers
 
92.3
%
 
92.0
%
 
92.3
%
 
92.3
%
 
91.4
%
Industrial / Flex
 
—
%
 
—
%
 
—
%
 
—
%
 
—
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
91.5
%
 
91.2
%
 
92.1
%
 
92.1
%
 
91.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Occupancy - All Properties
Sector
 
12/31/2011
 
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.2
%
 
94.1
%
 
94.9
%
 
94.8
%
 
95.5
%
Office Buildings
 
89.4
%
 
88.5
%
 
89.7
%
 
90.7
%
 
90.0
%
Medical Office Buildings
 
89.5
%
 
89.9
%
 
90.5
%
 
90.5
%
 
90.3
%
Retail Centers
 
93.0
%
 
92.3
%
 
92.3
%
 
92.0
%
 
91.4
%
Industrial / Flex
 
79.3
%
 
80.8
%
 
81.9
%
 
81.4
%
 
81.9
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
90.8
%
 
89.5
%
 
90.2
%
 
90.5
%
 
90.2
%


(1) Non same-store properties were:
Acquisitions:
Office - 140 Connecticut Avenue, 1227 25th Street, Braddock Metro Center and John Marshall II.
Retail - Gateway Overlook, Olney Village Center.
Medical Office - Lansdowne Medical Office Building.    
Held for sale and sold properties:
Office - The Ridges.
Industrial/Office - Ammendale I & II, Amvax and the Industrial Portfolio (see Supplemental Definitions for list of properties).


19



Commercial Leasing Summary
 
 

 
 
4th Quarter 2011
 
3rd Quarter 2011
 
2nd Quarter 2011
 
1st Quarter 2011
 
4th Quarter 2010
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
 
175,032
 
152,900
 
160,318
 
138,083
 
125,367
      Medical Office Buildings
 
65,162
 
29,070
 
61,374
 
43,355
 
7,136
      Retail Centers
 
23,375
 
59,910
 
38,482
 
78,669
 
97,055
Total
 
263,569
 
241,880
 
260,174
 
260,107
 
229,558
Weighted Average Term (yrs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
 
4.8
 
4.3
 
7.5
 
3.6
 
5.4
      Medical Office Buildings
 
4.4
 
4.9
 
5.5
 
6.0
 
3.9
      Retail Centers
 
5.9
 
5.9
 
8.2
 
4.5
 
8.4
Total
 
4.8
 
4.7
 
7.1
 
4.3
 
6.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
 
$
30.22

 
$
31.94

 
$
36.04

 
$
37.87

 
$
25.59

 
$
26.66

 
$
31.41

 
$
32.26

 
$
28.72

 
$
30.30

            Medical Office Buildings
 
34.70

 
37.70

 
34.63

 
36.79

 
30.74

 
32.36

 
32.91

 
34.90

 
35.53

 
37.37

            Retail Centers
 
22.12

 
23.02

 
14.14

 
17.39

 
23.67

 
24.20

 
15.64

 
15.91

 
15.50

 
16.13

Total
 
$
30.61

 
$
32.57

 
$
30.19

 
$
32.41

 
$
26.53

 
$
27.65

 
$
26.89

 
$
27.76

 
$
23.34

 
$
24.53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
 
$
31.38

 
$
29.66

 
$
39.53

 
$
37.76

 
$
29.06

 
$
26.64

 
$
30.97

 
$
29.91

 
$
31.39

 
$
29.41

            Medical Office Buildings
 
38.91

 
37.13

 
37.76

 
35.79

 
36.13

 
33.64

 
37.24

 
34.76

 
37.41

 
36.05

            Retail Centers
 
28.89

 
26.86

 
18.56

 
21.96

 
25.88

 
24.34

 
16.48

 
16.30

 
21.79

 
20.41

Total
 
$
33.02

 
$
31.26

 
$
33.71

 
$
33.24

 
$
30.25

 
$
27.96

 
$
27.63

 
$
26.60

 
$
27.52

 
$
25.81

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
 
3.82
%
 
(7.15
)%
 
9.69
%
 
(0.30
)%
 
13.58
%
 
(0.10
)%
 
(1.40
)%
 
(7.30
)%
 
9.31
%
 
(2.93
)%
            Medical Office Buildings
 
12.14
%
 
(1.51
)%
 
9.04
%
 
(2.70
)%
 
17.51
%
 
3.96
 %
 
13.14
 %
 
(0.41
)%
 
5.28
%
 
(3.53
)%
            Retail Centers
 
30.63
%
 
16.71
 %
 
31.29
%
 
26.25
 %
 
9.34
%
 
0.60
 %
 
5.39
 %
 
2.42
 %
 
40.57
%
 
26.50
 %
Total
 
7.87
%
 
(4.04
)%
 
11.66
%
 
2.56
 %
 
14.06
%
 
1.13
 %
 
2.76
 %
 
(4.17
)%
 
17.90
%
 
5.22
 %



20




Commercial Leasing Summary
Tenant Improvements and Leasing Costs
 
 
 
 
4th Quarter 2011
 
3rd Quarter 2011
 
2nd Quarter 2011
 
1st Quarter 2011
 
4th Quarter 2010
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Dollars
 
Dollars per Square Foot
 
Total Dollars
 
Dollars per Square Foot
 
Total Dollars
 
Dollars per Square Foot
 
Total Dollars
 
Dollars per Square Foot
 
Total Dollars
 
Dollars per Square Foot
Tenant Improvements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
 
$
3,691,099

 
$
21.09

 
$
2,067,782

 
$
13.52

 
$
3,019,025

 
$
18.83

 
$
535,261

 
$
3.88

 
$
2,461,268

 
$
19.63

            Medical Office Buildings
 
788,535

 
12.10

 
112,145

 
3.86

 
893,785

 
14.56

 
384,334

 
8.86

 
86,937

 
12.18

            Retail Centers
 
25,740

 
1.10

 
1,424,151

 
23.77

 
265,135

 
6.89

 
—

 
—

 
288,110

 
2.97

Subtotal
 
$
4,505,374

 
$
17.09

 
$
3,604,078

 
$
14.90

 
$
4,177,945

 
$
16.06

 
$
919,595

 
$
3.54

 
$
2,836,315

 
$
12.36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leasing Costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
 
$
2,133,927

 
$
12.19

 
$
1,596,565

 
$
10.44

 
$
2,189,912

 
$
13.66

 
$
582,007

 
$
4.21

 
$
1,478,762

 
$
11.80

            Medical Office Buildings
 
400,976

 
6.15

 
206,298

 
7.10

 
716,648

 
11.68

 
530,073

 
12.23

 
21,352

 
2.99

            Retail Centers
 
178,127

 
7.62

 
504,673

 
8.42

 
269,557

 
7.00

 
77,260

 
0.98

 
416,203

 
4.29

Subtotal
 
$
2,713,030

 
$
10.29

 
$
2,307,536

 
$
9.54

 
$
3,176,117

 
$
12.21

 
$
1,189,340

 
$
4.57

 
$
1,916,317

 
$
8.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant Improvements and Leasing Costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
 
$
5,825,026

 
$
33.28

 
$
3,664,347

 
$
23.96

 
$
5,208,937

 
$
32.49

 
$
1,117,268

 
$
8.09

 
$
3,940,030

 
$
31.43

            Medical Office Buildings
 
1,189,511

 
18.25

 
318,443

 
10.96

 
1,610,433

 
26.24

 
914,407

 
21.09

 
108,289

 
15.17

            Retail Centers
 
203,867

 
8.72

 
1,928,824

 
32.19

 
534,692

 
13.89

 
77,260

 
0.98

 
704,313

 
7.26

Total
 
$
7,218,404

 
$
27.38

 
$
5,911,614

 
$
24.44

 
$
7,354,062

 
$
28.27

 
$
2,108,935

 
$
8.11

 
$
4,752,632

 
$
20.71




21



10 Largest Tenants - Based on Annualized Rent
December 31, 2011
 
Tenant
Number of Buildings
 
Weighted Average Remaining Lease Term in Months
 
 Percentage of Aggregate Portfolio Annualized Rent
 
Aggregate Rentable Square Feet
 
Percentage of Aggregate Occupied Square Feet
 
 
 
 
 
 
 
 
 
 
World Bank
1

 
42

 
5.09
%
 
210,354

 
2.90
%
General Services Administration
6

 
34

 
2.99
%
 
170,834

 
2.36
%
Advisory Board Company
1

 
89

 
2.89
%
 
180,925

 
2.49
%
L-3 Services, Inc.
1

 
66

 
2.34
%
 
147,468

 
2.03
%
Booz Allen Hamilton, Inc.
1

 
49

 
2.29
%
 
222,989

 
3.07
%
Patton Boggs LLP
1

 
64

 
2.05
%
 
110,566

 
1.52
%
INOVA Health System
7

 
49

 
2.02
%
 
111,758

 
1.54
%
Sunrise Assisted Living, Inc.
1

 
21

 
1.63
%
 
115,289

 
1.59
%
Children's Hospital
3

 
82

 
1.27
%
 
77,858

 
1.07
%
General Dynamics
2

 
30

 
1.20
%
 
88,359

 
1.22
%
Total/Weighted Average
 
 
52

 
23.77
%
 
1,436,400

 
19.79
%



22



Industry Diversification
December 31, 2011
 

Industry Classification (NAICS)
Annualized Base Rental Revenue
 
Percentage of Aggregate Annualized Rent
 
Aggregate Rentable Square Feet
 
Percentage of Aggregate Square Feet
 
 
 
 
 
 
 
 
Professional, Scientific, and Technical Services
$
69,044,262

 
32.08
%
 
2,236,181

 
30.55
%
Ambulatory Health Care Services
38,216,211

 
17.76
%
 
1,120,210

 
15.30
%
Credit Intermediation and Related Activities
16,294,351

 
7.57
%
 
323,302

 
4.42
%
Executive, Legislative, and Other General Government Support
9,563,760

 
4.45
%
 
286,016

 
3.91
%
Food Services and Drinking Places
8,208,114

 
3.82
%
 
266,556

 
3.64
%
Religious, Grantmaking, Civic, Professional, and Similar Organizations
7,871,815

 
3.66
%
 
223,382

 
3.05
%
Food and Beverage Stores
5,995,726

 
2.79
%
 
340,857

 
4.66
%
Educational Services
5,931,048

 
2.76
%
 
205,119

 
2.80
%
Nursing and Residential Care Facilities
4,167,926

 
1.94
%
 
117,711

 
1.61
%
Administrative and Support Services
3,648,428

 
1.70
%
 
103,005

 
1.41
%
Miscellaneous Store Retailers
3,312,480

 
1.54
%
 
174,887

 
2.39
%
Health and Personal Care Stores
3,284,261

 
1.53
%
 
101,043

 
1.38
%
Clothing and Clothing Accessories Stores
3,096,308

 
1.44
%
 
158,694

 
2.17
%
Broadcasting (except Internet)
3,095,049

 
1.44
%
 
87,691

 
1.20
%
Furniture and Home Furnishings Stores
2,859,417

 
1.33
%
 
140,497

 
1.92
%
Electronics and Appliance Stores
2,635,406

 
1.22
%
 
159,925

 
2.19
%
Personal and Laundry Services
2,641,688

 
1.23
%
 
85,543

 
1.17
%
Hospitals
2,492,819

 
1.16
%
 
70,298

 
0.96
%
Sporting Goods, Hobby, Book, and Music Stores
2,478,297

 
1.15
%
 
157,094

 
2.15
%
General Merchandise Stores
1,839,527

 
0.86
%
 
221,502

 
3.03
%
Real Estate
1,721,734

 
0.80
%
 
59,720

 
0.82
%
Amusement, Gambling, and Recreation Industries
1,357,485

 
0.63
%
 
78,946

 
1.08
%
Transportation Equipment Manufacturing
1,211,231

 
0.56
%
 
39,989

 
0.55
%
Securities, Commodity Contracts, and Other Financial Investments and Related Activities
1,190,580

 
0.55
%
 
44,232

 
0.60
%
Printing and Related Support Activities
1,157,972

 
0.54
%
 
50,727

 
0.69
%
Computer and Electronic Product Manufacturing
1,144,504

 
0.53
%
 
40,684

 
0.56
%
Insurance Carriers and Related Activities
919,534

 
0.43
%
 
33,739

 
0.46
%
Publishing Industries (except Internet)
775,168

 
0.36
%
 
24,415

 
0.33
%
Merchant Wholesalers, Durable Goods
711,291

 
0.33
%
 
41,421

 
0.57
%
Motor Vehicle and Parts Dealers
641,969

 
0.30
%
 
39,895

 
0.55
%
Social Assistance
581,689

 
0.27
%
 
19,869

 
0.27
%
Building Material and Garden Equipment and Supplies Dealers
546,917

 
0.25
%
 
28,059

 
0.38
%
Construction of Buildings
508,632

 
0.24
%
 
19,070

 
0.26
%
Merchant Wholesalers, Nondurable Goods
450,766

 
0.21
%
 
27,786

 
0.38
%
Other
5,545,042

 
2.57
%
 
189,929

 
2.59
%
Total
$
215,141,407

 
100.00
%
 
7,317,994

 
100.00
%



23



Lease Expirations
December 31, 2011
 
 
 
Year
 
Number of Leases
 
Rentable Square Feet
 
Percent of Rentable Square Feet
 
Annualized Rent *
 
Average Rental Rate
 
Percent of Annualized Rent *
Office:
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
93

 
401,712

 
10.01
%
 
$
13,121,802

 
$
32.66

 
9.09
%
2013
 
92

 
472,377

 
11.77
%
 
14,884,900

 
31.51

 
10.31
%
2014
 
94

 
762,536

 
19.00
%
 
26,174,645

 
34.33

 
18.13
%
2015
 
80

 
552,217

 
13.76
%
 
22,523,910

 
40.79

 
15.60
%
2016
 
77

 
574,380

 
14.31
%
 
17,827,213

 
31.04

 
12.35
%
2017 and thereafter
 
118

 
1,250,530

 
31.15
%
 
49,840,482

 
39.86

 
34.52
%
 
 
554

 
4,013,752

 
100.00
%
 
$
144,372,952

 
$
35.97

 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Medical Office:
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
52

 
153,783

 
13.80
%
 
$
5,524,618

 
$
35.92

 
12.57
%
2013
 
58

 
172,431

 
15.47
%
 
6,040,863

 
35.03

 
13.74
%
2014
 
46

 
142,382

 
12.77
%
 
5,599,616

 
39.33

 
12.74
%
2015
 
29

 
97,754

 
8.77
%
 
3,708,132

 
37.93

 
8.44
%
2016
 
40

 
135,565

 
12.16
%
 
5,247,115

 
38.71

 
11.94
%
2017 and thereafter
 
100

 
412,662

 
37.03
%
 
17,831,008

 
43.21

 
40.57
%
 
 
325

 
1,114,577

 
100.00
%
 
$
43,951,352

 
$
39.43

 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail:
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
71

 
178,809

 
8.55
%
 
$
4,693,872

 
$
26.25

 
10.29
%
2013
 
46

 
410,729

 
19.64
%
 
6,356,853

 
15.48

 
13.94
%
2014
 
31

 
132,065

 
6.31
%
 
2,825,571

 
21.40

 
6.20
%
2015
 
34

 
299,173

 
14.30
%
 
5,953,691

 
19.90

 
13.06
%
2016
 
22

 
189,965

 
9.08
%
 
3,945,257

 
20.77

 
8.65
%
2017 and thereafter
 
98

 
880,835

 
42.12
%
 
21,827,781

 
24.78

 
47.86
%
 
 
302

 
2,091,576

 
100.00
%
 
$
45,603,025

 
$
21.80

 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total:
 
 
 
 
 
 
 
 
 
 
 
 
2012
 
216

 
734,304

 
10.17
%
 
$
23,340,292

 
$
31.79

 
9.98
%
2013
 
196

 
1,055,537

 
14.62
%
 
27,282,616

 
25.85

 
11.66
%
2014
 
171

 
1,036,983

 
14.36
%
 
34,599,832

 
33.37

 
14.79
%
2015
 
143

 
949,144

 
13.15
%
 
32,185,733

 
33.91

 
13.76
%
2016
 
139

 
899,910

 
12.46
%
 
27,019,585

 
30.02

 
11.55
%
2017 and thereafter
 
316

 
2,544,027

 
35.24
%
 
89,499,271

 
35.18

 
38.26
%
 
 
1,181

 
7,219,905

 
100.00
%
 
$
233,927,329

 
$
32.40

 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Lease expiration data exclude properties classified as sold or held for sale.
 
 
* Annualized Rent is equal to the rental rate effective at lease expiration (cash basis) multiplied by 12.
 
 



24



2011 Acquisition and Disposition Summary
December 31, 2011
($'s in thousands)
 
Acquisition Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition Date
 
Square Feet
 
Leased Percentage at Acquisition
 
12/31/2011 Leased Percentage
 
Investment
1140 Connecticut Avenue
Washington, DC
January 11, 2011
 
184,000

 
99%
 
86%
 
$
80,250

1227 25th Street
Washington, DC
March 30, 2011
 
130,000

 
72%
 
72%
 
47,000

650 North Glebe Road (1)
Arlington, Virginia
June 15, 2011
 
 land for development

 
N/A
 
N/A
 
11,800

Olney Village Center
Olney, Maryland
August 30, 2011
 
199,000

 
99%
 
100%
 
58,000

Braddock Metro Center
Alexandria, Virginia
September 13, 2011
 
345,000

 
92%
 
92%
 
101,000

John Marshall II
Tysons Corner, Virginia
September 15, 2011
 
223,000

 
100%
 
100%
 
73,500

1219 First Street (2)
Alexandria, Virginia
11/23/2011
 
 land for development

 
N/A
 
N/A
 
13,850

 
 
Total
 
1,081,000

 
 
 
 
 
$
385,400

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Disposition Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Disposition Date
 
Property Type
 
Square Feet
 
Contract Sales Price
 
GAAP Gain
Dulles Station, Phase I
Herndon, VA
April 5, 2011
 
Office
 
180,000

 
$
58,800

 
$
—

Industrial Portfolio (3)
Various locations
Various dates
 
Industrial/ Office
 
3,092,000

 
$
350,900

 
$
97,491

 
 
 
 
 
 
3,272,000

 
$
409,700

 
$
97,491


(1) Acquisition of 37,000 square feet of land in a joint venture to develop an apartment community. WRIT is a 90% owner of the joint venture.

(2) Acquisition of one acre of land in a joint venture to develop an apartment community. WRIT is a 95% owner of the joint venture.

(3) The Industrial Portfolio consists of every industrial property, as well as two office properties, the Crescent and Albemarle Point. On September 1, 2011 we closed on Phase I of the sale consisting of the two office properties and 8880 Gorman Road, Dulles South IV, Fullerton Business Center, Hampton Overlook, Alban Business Center, Pickett Industrial Park, Northern Virginia Industrial Park I, 270 Technology Park, Fullerton Industrial Center, Sully Square, 9950 Business Parkway, Hampton South and 8900 Telegraph Road. On October 3, 2011 we closed on Phase II of the sale, consisting of Northern Virginia Industrial Park II. On November 1, 2011 we closed on Phase III of the sale, consisting of 6100 Columbia Park Road and Dulles Business Park I and II.



25



Schedule of Properties
December 31, 2011
 
 
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET*
Office Buildings
 
 
 
 
 
 
 
 
1901 Pennsylvania Avenue
 
Washington, DC
 
1977
 
1960
 
98,000

51 Monroe Street
 
Rockville, MD
 
1979
 
1975
 
218,000

515 King Street
 
Alexandria, VA
 
1992
 
1966
 
73,000

6110 Executive Boulevard
 
Rockville, MD
 
1995
 
1971
 
199,000

1220 19th Street
 
Washington, DC
 
1995
 
1976
 
102,000

1600 Wilson Boulevard
 
Arlington, VA
 
1997
 
1973
 
168,000

7900 Westpark Drive
 
McLean, VA
 
1997
 
1972/1986/1999
 
533,000

600 Jefferson Plaza
 
Rockville, MD
 
1999
 
1985
 
113,000

1700 Research Boulevard
 
Rockville, MD
 
1999
 
1982
 
101,000

Wayne Plaza
 
Silver Spring, MD
 
2000
 
1970
 
94,000

Courthouse Square
 
Alexandria, VA
 
2000
 
1979
 
114,000

One Central Plaza
 
Rockville, MD
 
2001
 
1974
 
267,000

The Atrium Building
 
Rockville, MD
 
2002
 
1980
 
80,000

1776 G Street
 
Washington, DC
 
2003
 
1979
 
262,000

6565 Arlington Boulevard
 
Falls Church, VA
 
2006
 
1967/1998
 
130,000

West Gude Drive
 
Rockville, MD
 
2006
 
1984/1986/1988
 
275,000

Monument II
 
Herndon, VA
 
2007
 
2000
 
207,000

Woodholme Center
 
Pikesville, MD
 
2007
 
1989
 
75,000

2000 M Street
 
Washington, DC
 
2007
 
1971
 
239,000

2445 M Street
 
Washington, DC
 
2008
 
1986
 
290,000

925 Corporate Drive
 
Stafford, VA
 
2010
 
2007
 
134,000

1000 Corporate Drive
 
Stafford, VA
 
2010
 
2009
 
136,000

1140 Connecticut Avenue
 
Washington, DC
 
2011
 
1966
 
185,000

1227 25th Street
 
Washington, DC
 
2011
 
1988
 
132,000

Braddock Metro Center
 
Alexandria, VA
 
2011
 
1985
 
345,000

John Marshall II
 
Tysons Corner, VA
 
2011
 
1996/2010
 
223,000

Subtotal
 
 
 
 
 
 
 
4,793,000

 
 
 
 
 
 
 
 
 
Medical Office Buildings
 
 
 
 
 
 
 
 
Woodburn Medical Park I
 
Annandale, VA
 
1998
 
1984
 
73,000

Woodburn Medical Park II
 
Annandale, VA
 
1998
 
1988
 
96,000

Prosperity Medical Center I
 
Merrifield, VA
 
2003
 
2000
 
92,000

Prosperity Medical Center II
 
Merrifield, VA
 
2003
 
2001
 
89,000

Prosperity Medical Center III
 
Merrifield, VA
 
2003
 
2002
 
75,000

Shady Grove Medical Village II
 
Rockville, MD
 
2004
 
1999
 
66,000

8301 Arlington Boulevard
 
Fairfax, VA
 
2004
 
1965
 
49,000

Alexandria Professional Center
 
Alexandria, VA
 
2006
 
1968
 
114,000

9707 Medical Center Drive
 
Rockville, MD
 
2006
 
1994
 
38,000

15001 Shady Grove Road
 
Rockville, MD
 
2006
 
1999
 
51,000

Plumtree Medical Center
 
Bel Air, MD
 
2006
 
1991
 
33,000

15005 Shady Grove Road
 
Rockville, MD
 
2006
 
2002
 
52,000

2440 M Street
 
Washington, DC
 
2007
 
1986/2006
 
112,000

Woodholme Medical Office Building
 
Pikesville, MD
 
2007
 
1996
 
123,000

Ashburn Office Park
 
Ashburn, VA
 
2007
 
1998/2000/2002
 
75,000

CentreMed I & II
 
Centreville, VA
 
2007
 
1998
 
52,000

Sterling Medical Office Building
 
Sterling, VA
 
2008
 
1986/2000
 
36,000

Lansdowne Medical Office Building
 
Leesburg, VA
 
2009
 
2009
 
85,000

Subtotal
 
 
 
 
 
 
 
1,311,000


26



Schedule of Properties (continued)
December 31, 2011
 
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET*
 
 
 
 
 
 
 
 
 
Retail Centers
 
 
 
 
 
 
 
 
Takoma Park
 
Takoma Park, MD
 
1963
 
1962
 
51,000

Westminster
 
Westminster, MD
 
1972
 
1969
 
150,000

Concord Centre
 
Springfield, VA
 
1973
 
1960
 
76,000

Wheaton Park
 
Wheaton, MD
 
1977
 
1967
 
74,000

Bradlee
 
Alexandria, VA
 
1984
 
1955
 
168,000

Chevy Chase Metro Plaza
 
Washington, DC
 
1985
 
1975
 
49,000

Montgomery Village Center
 
Gaithersburg, MD
 
1992
 
1969
 
198,000

Shoppes of Foxchase (1)
 
Alexandria, VA
 
1994
 
1960
 
134,000

Frederick County Square
 
Frederick, MD
 
1995
 
1973
 
227,000

800 S. Washington Street
 
Alexandria, VA
 
1998/2003
 
1955/1959
 
47,000

Centre at Hagerstown
 
Hagerstown, MD
 
2002
 
2000
 
332,000

Frederick Crossing
 
Frederick, MD
 
2005
 
1999/2003
 
295,000

Randolph Shopping Center
 
Rockville, MD
 
2006
 
1972
 
82,000

Montrose Shopping Center
 
Rockville, MD
 
2006
 
1970
 
145,000

Gateway Overlook
 
Columbia, MD
 
2010
 
2007
 
223,000

Olney Village Center
 
Olney, MD
 
2011
 
1979/2003
 
198,000

Subtotal
 
 
 
 
 
 
 
2,449,000

 
 
 
 
 
 
 
 
 
Multifamily Buildings * / # units
 
 
 
 
 
 
 
 
3801 Connecticut Avenue / 308
 
Washington, DC
 
1963
 
1951
 
179,000

Roosevelt Towers / 191
 
Falls Church, VA
 
1965
 
1964
 
170,000

Country Club Towers / 227
 
Arlington, VA
 
1969
 
1965
 
159,000

Park Adams / 200
 
Arlington, VA
 
1969
 
1959
 
173,000

Munson Hill Towers / 279
 
Falls Church, VA
 
1970
 
1963
 
258,000

The Ashby at McLean / 256
 
McLean, VA
 
1996
 
1982
 
274,000

Walker House Apartments / 212
 
Gaithersburg, MD
 
1996
 
1971/2003 (2)
 
158,000

Bethesda Hill Apartments / 195
 
Bethesda, MD
 
1997
 
1986
 
226,000

Bennett Park / 224
 
Arlington, VA
 
2007
 
2007
 
214,000

Clayborne / 74
 
Alexandria, VA
 
2008
 
2008
 
60,000

Kenmore Apartments / 374
 
Washington, DC
 
2008
 
1948
 
268,000

Subtotal (2,540 units)
 
 
 
 
 
 
 
2,139,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL
 
 
 
 
 
 
 
10,692,000

 
 
 
 
 
 
 
 
 
* Multifamily buildings are presented in gross square feet.
(1) Development on approximately 60,000 square feet of the center was completed in December 2006.
(2) A 16 unit addition referred to as The Gardens at Walker House was completed in October 2003.



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Supplemental Definitions
December 31, 2011

 
 
 
Adjusted EBITDA (a non-GAAP measure) is earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt and gain/loss from non-disposal activities.
 
Annualized base rent ("ABR") is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.
 
Debt service coverage ratio is computed by dividing earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt and gain/loss from non-disposal activities by interest expense (including interest expense from discontinued operations) and principal amortization.
 
Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet plus the market value of shares outstanding at the end of the period.
 
Earnings to fixed charges ratio is computed by dividing earnings attributable to the controlling interest by fixed charges. For this purpose, earnings consist of income from continuing operations (or net income if there are no discontinued operations) plus fixed charges, less capitalized interest. Fixed charges consist of interest expense (excluding interest expense from discontinued operations), including amortized costs of debt issuance, plus interest costs capitalized.
 
Economic occupancy is calculated as actual real estate rental revenue recognized for the period indicated as a percentage of gross potential real estate rental revenue for that period. We determine gross potential real estate rental revenue by valuing occupied units or square footage at contract rates and vacant units or square footage at market rates for comparable properties. We do not consider percentage rents and expense reimbursements in computing economic occupancy percentages.
 
Funds from operations ("FFO") is defined by The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) in an April, 2002 White Paper as net income (computed in accordance with generally accepted accounting principles (“GAAP”)) excluding gains (or losses) associated with sales of property, impairment of depreciable real estate, plus real estate depreciation and amortization. We consider FFO to be a standard supplemental measure for equity real estate investment trusts (“REITs”) because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which historically assumes that the value of real estate assets diminishes predictably over time. Since real estate values have instead historically risen or fallen with market conditions, we believe that FFO more accurately provides investors an indication of our ability to incur and service debt, make capital expenditures and fund other needs. FFO is a non-GAAP measure.
 
Core Funds From Operations ("Core FFO") is calculated by adjusting FFO for the following items (which we believe are not indicative of the performance of WRIT’s operating portfolio and affect the comparative measurement of WRIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) real estate impairment not excluded from FFO and (3) costs related to the acquisition of properties, as appropriate. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core FFO serves as a useful, supplementary measure of WRIT’s ability to incur and service debt, and distribute dividends to its shareholders. Core FFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
 
Funds Available for Distribution ("FAD") is calculated by subtracting from FFO (1) recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding (3) non-real estate depreciation and amortization, (4) non-cash fair value interest expense and (5) amortization of restricted share compensation, then adding or subtracting the (6) amortization of lease intangibles, and (7) non-cash gain/loss on extinguishment of debt, as appropriate. FAD is included herein, because we consider it to be a measure of a REIT’s ability to incur and service debt and to distribute dividends to its shareholders. FAD is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
 
Core Funds Available for Distribution ("Core FAD") is calculated by adjusting FAD for the following items (which we believe are not indicative of the performance of WRIT’s operating portfolio and affect the comparative measurement of WRIT’s operating performance over time): (1) gains or losses on extinguishment of debt, (2) real estate imapirments not excluded from FAD and (3) costs related to the acquisition of properties. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core FAD serves as a useful, supplementary measure of WRIT’s ability to incur and service debt, and distribute dividends to its shareholders. Core FAD is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
The Industrial Portfolio consists of every industrial property, as well as two office properties, the Crescent and Albemarle Point. We executed the sale in three phases. Phase I of the Industrial Portfolio sale closed on September 2, 2011 consisting of industrial properties (8880 Gorman Road, Dulles South IV, Fullerton Business Center, Hampton Overlook, Alban Business Center, Pickett Industrial Park, Northern Virginia Industrial Park I, 270 Technology Park, Fullerton Industrial Center, Sully Square, 9950 Business Parkway, Hampton South and 8900 Telegraph Road) and two office properties (Crescent and Albemarle Point). On October 3, 2011 we closed on Phase II of the Industrial Portfolio sale, consisting of Northern Virginia Industrial Park II. We closed on Phase III of the Industrial Portfolio sale on November 1, 2011, consisting of 6100 Columbia Park Road and Dulles Business Park.
 
Physical occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period.
 
Recurring capital expenditures represent non-accretive building improvements and leasing costs required to maintain current revenues. Recurring capital expenditures do not include acquisition capital that was taken into consideration when underwriting the purchase of a building or which are incurred to bring a building up to "operating standard."
 
Rent increases on renewals and rollovers are calculated as the difference, weighted by square feet, of the net ABR due the first month after a term commencement date and the net ABR due the last month prior to the termination date of the former tenant's term.
 
Same-store portfolio properties include all properties that were owned for the entirety of the current and prior year reporting periods.
 
Same-store portfolio net operating income (NOI) growth is the change in the NOI of the same-store portfolio properties from the prior reporting period to the current reporting period.



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