NEWS RELEASE
CONTACT:


 
6110 Executive Blvd., Suite 800

William T. Camp
Rockville, Maryland 20852
Executive Vice President and
Tel 301-984-9400
Chief Financial Officer
Fax 301-984-9610
E-Mail: bcamp@writ.com
www.writ.com
 
 
 
 
February 13, 2013

WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES
FOURTH QUARTER AND YEAR-END FINANCIAL AND OPERATING RESULTS FOR 2012

Washington Real Estate Investment Trust (“WRIT” or the “Company”) (NYSE: WRE), a leading owner and operator of diversified properties in the Washington, D.C. region, reported financial and operating results today for the quarter and year ended December 31, 2012.

Strategic Initiatives

WRIT announced last month a simplification of its diversified strategy to focus on office, multifamily and retail assets - committing to a “live, work and shop in Washington, DC” focus for future investment.  To accelerate this strategy, WRIT announced that it is exploring a 2013 disposition of its 1.3 million square foot Medical Office Division.  

“WRIT's 53 year history of successfully owning and operating a diversified Washington, DC property portfolio has served its investors well.  As we look forward to the next 50 years, we see our strategy of focusing on the “live, work and shop” assets in urban locations, typically inside the beltway or near Metro, as the best way to continue to provide future growth for our shareholders.  Keeping future investment decisions to three divisions; office, multifamily and retail assets, we simplify our business model and narrow our capital allocation process while we continue to improve the quality and location of our assets,” stated John P. McDaniel, Chairman of WRIT's Board of Trustees.

WRIT anticipates capturing embedded value through the potential Medical Office Division sale, which should provide a lower cost of capital to continue to improve the quality, age and location of WRIT's properties in its core office, multifamily and retail sectors.  The Medical Office Division represents the largest portfolio of institutional quality medical office assets in the Washington, DC region, with all of the assets in affluent communities or urban centers or near major medical centers such as INOVA Fairfax, Shady Grove Adventist and George Washington Hospital. 

Financial Results

▪
Core Funds from Operations(1), defined as Funds from Operations(1) (“FFO”) excluding acquisition expense, gains or losses on extinguishment of debt, property impairment, and severance expense related to corporate reorganization, was $1.90 per diluted share for the year and $0.47 per diluted share for the quarter ended December 31, 2012, respectively, as compared to $1.95 per diluted share and $0.47 per diluted share for the corresponding periods in 2011.

•
Included in fourth quarter 2011 results was a $0.01 per diluted share charge related to a lawsuit with a former tenant at Westminster Shopping Center.

•
FFO for the year ended December 31, 2012 was $122.5 million, or $1.84 per diluted share, compared to


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$110.1 million, or $1.66 per diluted share, in 2011. FFO for the quarter ended December 31, 2012 was $27.7 million, or $0.42 per diluted share, compared to $15.6 million, or $0.23 per diluted share, in the same period one year ago.

•
Included in full year 2012 and fourth quarter 2012 FFO is a real estate impairment of $2.1 million, or $0.03 per diluted share, which reflects the write-down of WRIT's investment in land at 4661 Kenmore Avenue to its estimated fair market value. Also included in full year 2012 and fourth quarter 2012 FFO is a severance expense of $1.6 million, or $0.02 per diluted share, related to corporate reorganization. Included in full year 2011 and fourth quarter 2011 FFO is a real estate impairment of $14.5 million, or $0.22 per diluted share, which reflects the write-down of WRIT's investment in the office development at Dulles Station, Phase II to its estimated fair market value.

▪
Net income attributable to the controlling interests for the year ended December 31, 2012 was $23.7 million, or $0.35 per diluted share, compared to $104.9 million, or $1.58 per diluted share, in 2011. Included in 2012 net income are gains on sale of real estate of $5.1 million, or $0.08 per diluted share, and real estate impairment of $2.1 million, or $0.03 per diluted share. Included in 2011 net income are gains on sale of real estate of $97.5 million, or $1.48 per diluted share, real estate impairment of $14.5 million, or $0.22 per diluted share, acquisition costs of $3.6 million, or $0.05 per diluted share, and loss on extinguishment of debt of $1.0 million, or $0.01 per diluted share.
 
▪
Net income attributable to the controlling interests for the quarter ended December 31, 2012 was $3.0 million, or $0.04 per diluted share, compared to $30.7 million, or $0.46 per diluted share, in the same period one year ago. Included in fourth quarter 2012 net income are gains on sale of real estate of $1.4 million, or $0.02 per share, and real estate impairment of $2.1 million, or $0.03 per share. Included in fourth quarter 2011 net income are gains on sale of real estate of $40.9 million, or $0.62 per share, real estate impairment of $14.5 million, or $0.22 per share, and loss on extinguishment of debt of $1.0 million, or $0.01 per share.

“We ended the year operationally on a steady note, with core FFO of $0.47 in line with our expectations. Our balance sheet is strong, with minimal maturities in 2013 and ample capacity to fund acquisition and development opportunities in the coming months. We are looking forward to executing our 2013 strategic initiatives,” said George F. “Skip” McKenzie, President and Chief Executive Officer of WRIT.

Operating Results

The Company's overall portfolio Net Operating Income (“NOI”)(2) was $51.3 million compared to $49.7 million in the same period one year ago and $50.2 million in the third quarter of 2012. Overall portfolio physical occupancy for the fourth quarter was 88.1%, compared to 90.8% in the same period one year ago and 89.2% in the third quarter of 2012.
 
Same-store(3) portfolio physical occupancy for the fourth quarter was 88.7%, compared to 91.5% in the same period one year ago. Sequentially, same-store physical occupancy decreased 100 basis points (bps) compared to the third quarter of 2012. Same-store portfolio NOI for the fourth quarter increased 1.2% and rental rate growth was 1.4% compared to the same period one year ago.

▪
Office: 49.2% of Total NOI - Office properties' same-store NOI for the fourth quarter decreased 1.1% compared to the same period one year ago. Rental rate growth was 0.9% while same-store physical occupancy decreased 430 bps to 84.9%. Sequentially, same-store physical occupancy decreased 140 bps compared to the third quarter of 2012.
▪
Retail: 20.0% of Total NOI - Retail properties' same-store NOI for the fourth quarter increased 8.2% compared to the same period one year ago. Included in fourth quarter 2011 results was a $0.01 per diluted share charge related to a lawsuit with a former tenant at Westminster Shopping Center. Rental rate growth was 0.3% while same-store physical occupancy decreased 210 bps to 91.2%. Sequentially, same-store physical occupancy decreased 160 bps compared to the third quarter of 2012.
▪
Multifamily: 16.3% of Total NOI - Multifamily properties' same-store NOI for the fourth quarter increased 4.1% compared to the same period one year ago. Rental rate growth was 4.1% while same-store physical occupancy decreased 80 bps to 94.1%. Sequentially, same-store physical occupancy decreased 70 bps compared to the third quarter of 2012.
▪
Medical Office: 14.5% of Total NOI - Medical office properties' same-store NOI for the fourth quarter decreased


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3.1% compared to the same period one year ago. Rental rate growth was 1.3% while same-store physical occupancy decreased 140 bps to 89.1%. Sequentially, same-store physical occupancy increased 110 bps compared to the third quarter of 2012.

Leasing Activity

During the fourth quarter, WRIT signed commercial leases for 270,492 square feet with an average rental rate increase of 9.5% over expiring lease rates on a GAAP basis, an average lease term of 6.2 years, tenant improvement costs of $19.71 per square foot and leasing costs of $9.83 per square foot.
 
▪
Rental rates for new and renewed office leases increased 11.8% to $33.67 per square foot, with $26.06 per square foot in tenant improvement costs and $12.72 per square foot in leasing costs. Weighted average term for new and renewed leases was 6.2 years.
 
▪
Rental rates for new and renewed retail leases increased 5.8% to $20.64 per square foot, with $2.27 per square foot in tenant improvement costs and $1.26 per square foot in leasing costs. Weighted average term for new and renewed leases was 5.5 years.

▪
Rental rates for new and renewed medical office leases increased 4.8% to $35.03 per square foot, with $27.25 per square foot in tenant improvement costs and $14.35 per square foot in leasing costs. Weighted average term for new and renewed leases was 7.3 years.
 
Dispositions

In the fourth quarter, WRIT sold Plumtree Professional Center, a 33,000 square foot medical office building in Bel Air, Maryland, for $8.75 million and recorded a net book gain of $1.4 million. The property was built in 1991 and acquired by WRIT as part of a portfolio acquisition in 2006. The unleveraged internal rate of return over the holding period was 13%.

Financing Activity

In the fourth quarter, WRIT prepaid without penalty five mortgage notes with an aggregate principal amount of $58.8 million, including 15005 Shady Grove Road, 9707 Medical Center Drive, 8501-8503 Arlington Boulevard, 8505 Arlington Boulevard and Plumtree Professional Center. The weighted average interest rate on these five notes was 5.43%. Subsequent to quarter end, WRIT prepaid without penalty the West Gude mortgage note, having a principal amount of $30.0 million and an interest rate of 5.855%, primarily using borrowings from our unsecured lines of credit.

Dividends

On December 31, 2012, WRIT paid a quarterly dividend of $0.30 per share.

Conference Call Information

The Conference Call for 4th Quarter Earnings is scheduled for Thursday, February 14, 2013 at 2:00 P.M. Eastern time. Conference Call access information is as follows:
 
USA Toll Free Number:        1-877-407-9205
International Toll Number:    1-201-689-8054
 
The instant replay of the Conference Call will be available until February 28, 2013 at 11:59 P.M. Eastern time. Instant replay access information is as follows:
 
USA Toll Free Number:        1-877-660-6853
International Toll Number:    1-201-612-7415
Conference ID:         406970
 
The live on-demand webcast of the Conference Call will be available on the Investor section of WRIT's website at


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www.writ.com. On-line playback of the webcast will be available for two weeks following the Conference Call.


About WRIT

WRIT is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington metro region. WRIT owns a diversified portfolio of 70 properties, totaling approximately 9 million square feet of commercial space and 2,540 residential units, and land held for development. These 70 properties consist of 26 office properties, 17 medical office properties, 16 retail centers and 11 multifamily properties. WRIT shares are publicly traded on the New York Stock Exchange (NYSE: WRE).
Note: WRIT's press releases and supplemental financial information are available on the company website at www.writ.com or by contacting Investor Relations at (301) 984-9400.
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 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 2011 Form 10-K and our subsequent Quarterly Reports on Form 10-Q. We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

(1) Funds From Operations (“FFO”) - The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) defines FFO (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 and real estate depreciation and amortization. FFO is a non-GAAP measure and does not replace net income as a measure of performance or net cash provided by operating activities as a measure of liquidity. 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.

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) costs related to the acquisition of properties, (3) severance expense related to corporate reorganization, and (4) property impairments not already excluded from FFO, 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 to distribute dividends to its shareholders. Core FFO is a non-GAAP and non-standardized measure and may be calculated differently by other REITs.

(2) Net Operating Income (“NOI”), defined as real estate rental revenue less real estate expenses, is a non-GAAP measure. NOI is calculated as net income, less non-real estate revenue and the results of discontinued operations (including the gain on sale, if any), plus interest expense, depreciation and amortization, general and administrative expenses, acquisition costs and real estate impairment. We provide NOI as a supplement to net income calculated in accordance with GAAP. As such, it should not be considered an alternative to net income as an indication of our operating performance. It is the primary performance measure we use to assess the results of our operations at the property level.

(3) For purposes of evaluating comparative operating performance, we categorize our properties as “same-store” or “non-same-store”. A same-store property was owned for the entirety of the periods being evaluated and is stabilized from an occupancy standpoint. A non-same-store property is one that was acquired or placed into service during either of the periods being evaluated, or is not stabilized from an occupancy standpoint.

(4) Funds Available for Distribution (“FAD”) is a non-GAAP measure. It 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) amortization of restricted share and unit compensation, and adding or subtracting amortization of lease intangibles, as appropriate. We consider FAD 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-standardized measure and may be calculated differently by other REITs.



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Physical Occupancy Levels by Same-Store Properties (i) and All Properties
 
Physical Occupancy
 
Same-Store Properties
 
All Properties
Segment
4th QTR
 
4th QTR
 
4th QTR
 
4th QTR
 
2012
 
2011
 
2012
 
2011
Multifamily
94.1
%
 
94.9
%
 
94.1
%
 
94.9
%
Office
84.9
%
 
89.2
%
 
84.5
%
 
89.0
%
Medical Office
89.1
%
 
90.5
%
 
85.6
%
 
86.5
%
Retail
91.2
%
 
93.3
%
 
91.2
%
 
93.3
%
 
 
 
 
 
 
 
 
Overall Portfolio
88.7
%
 
91.5
%
 
88.1
%
 
90.8
%

(i) Same-Store properties include all stabilized properties that were owned for the entirety of the current and prior year reporting periods. For Q4 2012 and Q4 2011, same-store properties exclude:
Multifamily Acquisitions: none;
Office Acquisition: Fairgate at Ballston;
Medical Office Acquisition: Lansdowne Medical Office Building;
Retail Acquisitions: none.

Also excluded from Same-Store Properties in Q4 2011 and Q4 2010 are:
Held for Sale and Sold Properties: The Atrium Building, 1700 Research Boulevard, Plumtree Medical Center, Northern Virginia Industrial Park II, 6100 Columbia Park Road and Dulles Business Park I and II.





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 WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
OPERATING RESULTS
2012
 
2011
 
2012
 
2011
Revenue
 
 
 
 
 
 
 
Real estate rental revenue
$
77,071

 
$
75,413

 
$
304,983

 
$
284,156

Expenses
 
 
 
 
 
 
 
Real estate expenses
25,791

 
25,666

 
103,276

 
95,342

Depreciation and amortization
26,131

 
25,029

 
103,067

 
91,805

Acquisition costs
90

 
36

 
234

 
3,607

Real estate impairment
2,097

 
14,526

 
2,097

 
14,526

General and administrative
4,545

 
4,140

 
15,488

 
15,728

 
58,654

 
69,397

 
224,162

 
221,008

Real estate operating income
18,417

 
6,016

 
80,821

 
63,148

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(17,411
)
 
(16,142
)
 
(64,697
)
 
(66,214
)
Other income
242

 
258

 
975

 
1,144

Loss on extinguishment of debt
—

 
(976
)
 
—

 
(976
)
 
(17,169
)
 
(16,860
)
 
(63,722
)
 
(66,046
)
Income (loss) from continuing operations
1,248

 
(10,844
)
 
17,099

 
(2,898
)
Discontinued operations:
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
310

 
1,090

 
1,485

 
11,923

Income tax expense
—

 
—

 
—

 
(1,138
)
Gain on sale of real estate
1,400

 
40,852

 
5,124

 
97,491

Net income
2,958

 
31,098

 
23,708

 
105,378

Less: Income from operations attributable to noncontrolling interests in subsidiaries
—

 
(9
)
 
—

 
(94
)
Less: Gain on sale of real estate attributable to noncontrolling interests in subsidiaries
—

 
(400
)
 
—

 
(400
)
Net income attributable to the controlling interests
$
2,958

 
$
30,689

 
$
23,708

 
$
104,884

 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to the controlling interests
$
1,248

 
$
(10,844
)
 
$
17,099

 
$
(2,898
)
Continuing operations real estate depreciation and amortization
26,131

 
25,029

 
103,067

 
91,805

Funds from continuing operations (1)
27,379

 
14,185

 
120,166

 
88,907

 
 
 
 
 
 
 
 
Discontinued Operations:
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
310

 
1,090

 
1,485

 
11,923

Income from operations attributable to noncontrolling interests in subsidiaries
—

 
(9
)
 
—

 
(94
)
Real estate impairment
—

 
—

 
—

 
599

Real estate depreciation and amortization
—

 
369

 
867

 
8,723

Funds from discontinued operations
310

 
1,450

 
2,352

 
21,151

 
 
 
 
 
 
 
 
Funds from operations (1)
$
27,689

 
$
15,635

 
$
122,518

 
$
110,058

 
 
 
 
 
 
 
 
Tenant improvements
(4,901
)
 
(5,100
)
 
(16,540
)
 
(11,889
)
External and internal leasing commissions capitalized
(2,334
)
 
(1,485
)
 
(9,157
)
 
(8,692
)
Recurring capital improvements
(1,414
)
 
(1,626
)
 
(7,307
)
 
(7,537
)
Straight-line rents, net
(738
)
 
(776
)
 
(3,265
)
 
(2,734
)
Non-cash fair value interest expense
253

 
(53
)
 
926

 
462

Non real estate depreciation & amortization of debt costs
911

 
845

 
3,854

 
3,733

Amortization of lease intangibles, net
41

 
(32
)
 
6

 
(1,052
)
Amortization and expensing of restricted share and unit compensation
1,842

 
1,459

 
5,786

 
5,580

     Real estate impairment
2,097

 
14,526

 
2,097

 
14,526

Funds available for distribution(4)
$
23,446

 
$
23,393

 
$
98,918

 
$
102,455

Note: Certain prior period amounts have been reclassified to conform to the current presentation.


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Three Months Ended December 31,
 
Year Ended December 31,
Per share data:
 
2012
 
2011
 
2012
 
2011
Income (loss) from continuing operations
(Basic)
$
0.02

 
$
(0.16
)
 
$
0.25

 
$
(0.04
)
 
(Diluted)
$
0.02

 
$
(0.16
)
 
$
0.25

 
$
(0.04
)
Net income attributable to the controlling interests
(Basic)
$
0.04

 
$
0.46

 
$
0.35

 
$
1.58

 
(Diluted)
$
0.04

 
$
0.46

 
$
0.35

 
$
1.58

Funds from continuing operations
(Basic)
$
0.41

 
$
0.21

 
$
1.81

 
$
1.35

 
(Diluted)
$
0.41

 
$
0.21

 
$
1.80

 
$
1.35

Funds from operations
(Basic)
$
0.42

 
$
0.23

 
$
1.84

 
$
1.66

 
(Diluted)
$
0.42

 
$
0.23

 
$
1.84

 
$
1.66

 
 
 
 
 
 
 
 
 
Dividends paid
 
$
0.3000

 
$
0.4338

 
$
1.4675

 
$
1.7350

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
66,273

 
66,069

 
66,239

 
65,982

Fully diluted weighted average shares outstanding
 
66,416

 
66,069

 
66,376

 
65,982




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WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
December 31,
 
2012
 
2011
Assets
 
 
 
Land
$
483,198

 
$
465,445

Income producing property
1,979,348

 
1,899,440

 
2,462,546

 
2,364,885

Accumulated depreciation and amortization
(604,614
)
 
(521,503
)
Net income producing property
1,857,932

 
1,843,382

Development in progress
49,135

 
43,089

Total real estate held for investment, net
1,907,067

 
1,886,471

Investment in real estate sold or held for sale
11,528

 
27,669

Cash and cash equivalents
19,324

 
12,765

Restricted cash
14,582

 
19,229

Rents and other receivables, net of allowance for doubtful accounts of $10,958 and $8,683, respectively
57,076

 
53,227

Prepaid expenses and other assets
114,541

 
120,075

Other assets related to property sold or held for sale
258

 
1,322

Total assets
$
2,124,376

 
$
2,120,758

 
 
 
 
Liabilities
 
 
 
Notes payable
$
906,190

 
$
657,470

Mortgage notes payable
342,970

 
423,291

Lines of credit
—

 
99,000

Accounts payable and other liabilities
52,823

 
51,079

Advance rents
16,096

 
13,584

Tenant security deposits
9,936

 
8,728

Other liabilities related to property sold or held for sale
218

 
4,774

Total liabilities
1,328,233

 
1,257,926

 
 
 
 
Equity
 
 
 
Shareholders' equity
 
 
 
Preferred shares; $0.01 par value; 10,000 shares authorized; no shares issued or outstanding
—

 
—

Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 66,437 and 66,265 shares issued and outstanding, respectively
664

 
662

Additional paid-in capital
1,145,515

 
1,138,478

Distributions in excess of net income
(354,122
)
 
(280,096
)
Total shareholders' equity
792,057

 
859,044

Noncontrolling interests in subsidiaries
4,086

 
3,788

Total equity
796,143

 
862,832

Total liabilities and equity
$
2,124,376

 
$
2,120,758

 
 
 
 
Note: Certain prior year amounts have been reclassified to conform to the current year presentation.




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The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands):
 
 
 
 
 
 
 
 
 
 
Quarter Ended December 31, 2012
Multifamily
 
Office
 
Medical Office
 
Retail
 
Total
Same-store net operating income(3)
$
8,364

 
$
24,394

 
$
7,312

 
$
10,273

 
$
50,343

Add: Net operating income from non-same-store properties(3)
—

 
824

 
113

 
—

 
937

Total net operating income(2)
$
8,364

 
$
25,218

 
$
7,425

 
$
10,273

 
$
51,280

Add/(deduct):
 
 
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
 
 
242

Acquisition costs
 
 
 
 
 
 
 
 
(90
)
Interest expense
 
 
 
 
 
 
 
 
(17,411
)
Depreciation and amortization
 
 
 
 
 
 
 
 
(26,131
)
General and administrative expenses
 
 
 
 
 
 
 
 
(4,545
)
Real estate impairment
 
 
 
 
 
 
 
 
(2,097
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
 
 
310

Gain on sale of real estate
 
 
 
 
 
 
 
 
1,400

Net income
 
 
 
 
 
 
 
 
2,958

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
 
 
—

Net income attributable to the controlling interests
 
 
 
 
 
 
 
 
$
2,958

 
 
 
 
 
 
 
 
 
 
Quarter Ended December 31, 2011
Multifamily
 
Office
 
Medical Office
 
Retail
 
Total
Same-store net operating income(3)
$
8,033

 
$
24,667

 
$
7,549

 
$
9,492

 
$
49,741

Add: Net operating income (loss) from non-same-store properties(3)
—

 
(47
)
 
53

 
—

 
6

Total net operating income(2)
$
8,033

 
$
24,620

 
$
7,602

 
$
9,492

 
$
49,747

Add/(deduct):
 
 
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
 
 
258

Acquisition costs
 
 
 
 
 
 
 
 
(36
)
Interest expense
 
 
 
 
 
 
 
 
(16,142
)
Depreciation and amortization
 
 
 
 
 
 
 
 
(25,029
)
General and administrative expenses
 
 
 
 
 
 
 
 
(4,140
)
Loss on extinguishment of debt
 
 
 
 
 
 
 
 
(976
)
Real estate impairment
 
 
 
 
 
 
 
 
(14,526
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
 
 
1,090

Gain on sale of real estate
 
 
 
 
 
 
 
 
40,852

Net income
 
 
 
 
 
 
 
 
31,098

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
 
 
(409
)
Net income attributable to the controlling interests
 
 
 
 
 
 
 
 
$
30,689





Washington Real Estate Investment Trust
Page 10 of 11



The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands):
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2012
Multifamily
 
Office
 
Medical Office
 
Retail
 
Total
Same-store net operating income(3)
$
32,420

 
$
77,087

 
$
29,296

 
$
37,806

 
$
176,609

Add: Net operating income from non-same-store properties(3)
—

 
20,716

 
384

 
3,998

 
25,098

Total net operating income(2)
$
32,420

 
$
97,803

 
$
29,680

 
$
41,804

 
$
201,707

Add/(deduct):
 
 
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
 
 
975

Acquisition costs
 
 
 
 
 
 
 
 
(234
)
Interest expense
 
 
 
 
 
 
 
 
(64,697
)
Depreciation and amortization
 
 
 
 
 
 
 
 
(103,067
)
General and administrative expenses
 
 
 
 
 
 
 
 
(15,488
)
Real estate impairment
 
 
 
 
 
 
 
 
(2,097
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
 
 
1,485

Gain on sale of real estate
 
 
 
 
 
 
 
 
5,124

Net income
 
 
 
 
 
 
 
 
23,708

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
 
 
—

Net income attributable to the controlling interests
 
 
 
 
 
 
 
 
$
23,708

 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2011
Multifamily
 
Office
 
Medical Office
 
Retail
 
Total
Same-store net operating income(3)
$
31,262

 
$
80,795

 
$
30,336

 
$
34,764

 
$
177,157

Add: Net operating income from non-same-store properties(3)
—

 
10,241

 
32

 
1,384

 
11,657

Total net operating income(2)
$
31,262

 
$
91,036

 
$
30,368

 
$
36,148

 
$
188,814

Add/(deduct):
 
 
 
 
 
 
 
 
 
Other income (expense)
 
 
 
 
 
 
 
 
1,144

Acquisition costs
 
 
 
 
 
 
 
 
(3,607
)
Interest expense
 
 
 
 
 
 
 
 
(66,214
)
Depreciation and amortization
 
 
 
 
 
 
 
 
(91,805
)
General and administrative expenses
 
 
 
 
 
 
 
 
(15,728
)
Loss on extinguishment of debt
 
 
 
 
 
 
 
 
(976
)
Real estate impairment
 
 
 
 
 
 
 
 
(14,526
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
 
 
11,923

Income tax expense
 
 
 
 
 
 
 
 
(1,138
)
Gain on sale of real estate
 
 
 
 
 
 
 
 
97,491

Net income
 
 
 
 
 
 
 
 
105,378

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
 
 
(494
)
Net income attributable to the controlling interests
 
 
 
 
 
 
 
 
$
104,884




Washington Real Estate Investment Trust
Page 11 of 11



The following table contains a reconciliation of net income attributable to the controlling interests to core funds from operations for the periods presented (in thousands, except per share amounts):
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2012
 
2011
 
2012
 
2011
Net income attributable to the controlling interests
 
$
2,958

 
$
30,689

 
$
23,708

 
$
104,884

Add/(deduct):
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
 
26,131

 
25,029

 
103,067

 
91,805

Discontinued operations:
 
 
 
 
 
 
 
 
Gain on sale of real estate
 
(1,400
)
 
(40,852
)
 
(5,124
)
 
(97,491
)
Gain on sale of real estate attributable to the noncontrolling interests
 
—

 
400

 
—

 
400

Income tax expense
 
—

 
—

 
—

 
1,138

Real estate impairment
 
—

 
—

 
—

 
599

Real estate depreciation and amortization
 
—

 
369

 
867

 
8,723

Funds from operations(1)
 
27,689

 
15,635

 
122,518

 
110,058

Add/(deduct):
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
—

 
976

 
—

 
976

Real estate impairment
 
2,097

 
14,526

 
2,097

 
14,526

Severance expense
 
1,583

 
—

 
1,583

 
—

Acquisition costs
 
90

 
36

 
234

 
3,607

 
 
 
 
 
 
 
 
 
Core funds from operations(1)
 
$
31,459

 
$
31,173

 
$
126,432

 
$
129,167

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
Per share data attributable to the controlling interests:
 
2012
 
2011
 
2012
 
2011
Funds from operations
(Basic)
$
0.42

 
$
0.23

 
$
1.84

 
$
1.66

 
(Diluted)
$
0.42

 
$
0.23

 
$
1.84

 
$
1.66

Core FFO
(Basic)
$
0.47

 
$
0.47

 
$
1.90

 
$
1.95

 
(Diluted)
$
0.47

 
$
0.47

 
$
1.90

 
$
1.95

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
66,273

 
66,069

 
66,239

 
65,982

Fully diluted weighted average shares outstanding
 
66,416

 
66,069

 
66,376

 
65,982