Second Quarter 2013
 
 
 
 
Supplemental Operating and Financial Data
 
 
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

Second Quarter 2013


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.

WRIT announced the renovation of 7900 Westpark Drive, a 528,000 square foot office complex located in Tysons Corner, Virginia at the corner of Westpark Drive and Jones Branch drive, immediately off the Capital Beltway (I-495) and Route 123. 7900 Westpark Drive is within four city blocks of the Tysons I & II Metro Station, scheduled to open in 2013, and has direct access to the new 495 Express Lanes. Construction is projected to commence in the fourth quarter 2013 and has a total project cost of $35 million.

WRIT had over one million square feet receive the designation LEED® EB during the second quarter of 2013. 925 Corporate Drive and 1000 Corporate Drive in Quantico, Virginia achieved LEED® EB Silver and are the first to achieve LEED® for Existing Building certification in Stafford County, Virginia. Additionally, 2000 M Street in Washington, DC was certified LEED® EB Gold, and 7900 Westpark Drive in Tysons Corner, Virginia was certified LEED® EB Silver.

In the second quarter, 1220 19th Street, located in Washington, DC, received the Apartment and Office Building Association's (AOBA) TOBY (The Outstanding Building of the Year) Award in the Earth category. "Over the past several years we have increased our commitment to renewable energy, to date having six office properties totaling 1.2 million square feet and fourteen office properties totaling 2.3 million square feet designated LEED® EB and Energy Star, respectively," said Brad Cederdahl, Senior Vice President of Property Operations at WRIT. "Our initiative to establish 1220 19th Street as a green building, through renovations and improvements over the past two years has resulted in achieving LEED® EB Gold Certification, and now receiving the TOBY award."

WRIT signed commercial leases totaling 417,615 square feet, including 103,513 square feet of new leases and 314,102 square feet of renewal leases. New leases had an average rental rate increase of 7.0% over expiring lease rates on a GAAP basis, an average lease term of 7.6 years, and total concessions of $55.65 per square foot. Renewal leases had an average rental rate increase of 8.9% over expiring lease rates on a GAAP basis, an average lease term of 5.6 years, and total concessions of $5.41 per square foot.

As of June 30, 2013, WRIT owned a diversified portfolio of 69 properties totaling approximately 8 million square feet of commercial space and 2,540 residential units, and land held for development. These 69 properties consist of 25 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).









Company Background and Highlights

Second Quarter 2013

Net Operating Income Contribution by Sector - Second Quarter 2013

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 2012 Annual Report on Form 10-K and 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.



Supplemental Financial and Operating Data

Table of Contents

June 30, 2013
 
 
 
Schedule
Page
Key Financial Data
 
 
 
 
 
 
Capital Analysis
 
 
 
 
 
Portfolio Analysis
 
 
 
 
 
 
Growth and Strategy
 
 
 
Tenant Analysis
 
 
 
 
 
 
Appendix
 
 
 




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

 
Three Months Ended
OPERATING RESULTS
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Real estate rental revenue
$
78,272

 
$
76,924

 
$
77,071

 
$
77,108

 
$
75,590

Real estate expenses
(27,429
)
 
(27,091
)
 
(25,791
)
 
(26,901
)
 
(25,033
)
 
50,843

 
49,833

 
51,280

 
50,207

 
50,557

Real estate depreciation and amortization
(25,582
)
 
(25,524
)
 
(26,131
)
 
(26,127
)
 
(25,227
)
Income from real estate
25,261

 
24,309

 
25,149

 
24,080

 
25,330

Interest expense
(16,152
)
 
(16,518
)
 
(17,411
)
 
(15,985
)
 
(15,470
)
Other income
246

 
239

 
242

 
237

 
252

Acquisition costs
(87
)
 
(213
)
 
(90
)
 
164

 
(254
)
Real estate impairment
—

 
—

 
(2,097
)
 
—

 
—

General and administrative
(4,005
)
 
(3,862
)
 
(4,545
)
 
(3,173
)
 
(4,164
)
Income from continuing operations
5,263

 
3,955

 
1,248

 
5,323

 
5,694

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

 
185

 
310

 
514

 
314

Gain on sale of real estate
—

 
3,195

 
1,400

 
3,724

 
—

Income from discontinued operations
—

 
3,380

 
1,710

 
4,238

 
314

 
 
 
 
 
 
 
 
 
 
Net income
5,263

 
7,335

 
2,958

 
9,561

 
6,008

Less: Net income from noncontrolling interests
—

 
—

 
—

 
—

 
—

Net income attributable to the controlling interests
$
5,263

 
$
7,335

 
$
2,958

 
$
9,561

 
$
6,008

Per Share Data:
 
 
 
 
 
 
 
 
 
Net income
$
0.08

 
$
0.11

 
$
0.04

 
$
0.14

 
$
0.09

Fully diluted weighted average shares outstanding
66,556

 
66,519

 
66,416

 
66,379

 
66,380

Percentage of Revenues:
 
 
 
 
 
 
 
 
 
Real estate expenses
35.0
%
 
35.2
%
 
33.5
%
 
34.9
%
 
33.1
%
General and administrative
5.1
%
 
5.0
%
 
5.9
%
 
4.1
%
 
5.5
%
Ratios:
 
 
 
 
 
 
 
 
 
Adjusted EBITDA / Interest expense
2.9x

 
2.8x

 
2.7x

 
3.0x

 
3.1x

Income from continuing operations/Total real estate revenue
6.7
%
 
5.1
%
 
1.6
%
 
6.9
%
 
7.5
%
Net income /Total real estate revenue
6.7
%
 
9.5
%
 
3.8
%
 
12.4
%
 
7.9
%
Note: Certain prior quarter amounts have been reclassified to conform to the current quarter presentation.
 
 

4



Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Assets
 
 
 
 
 
 
 
 
 
Land
$
483,198

 
$
483,198

 
$
483,198

 
$
483,198

 
$
483,199

Income producing property
2,003,826

 
1,988,929

 
1,979,348

 
1,966,032

 
1,953,160

 
2,487,024

 
2,472,127

 
2,462,546

 
2,449,230

 
2,436,359

Accumulated depreciation and amortization
(646,993
)
 
(625,774
)
 
(604,614
)
 
(583,706
)
 
(563,036
)
Net income producing property
1,840,031

 
1,846,353

 
1,857,932

 
1,865,524

 
1,873,323

Development in progress, including land held for development
55,262

 
52,906

 
49,135

 
48,106

 
45,928

Total real estate held for investment, net
1,895,293

 
1,899,259

 
1,907,067

 
1,913,630

 
1,919,251

Investment in real estate held for sale, net
—

 
—

 
11,528

 
18,264

 
27,076

Cash and cash equivalents
5,919

 
16,743

 
19,324

 
68,403

 
14,367

Restricted cash
10,839

 
10,804

 
14,582

 
19,615

 
19,632

Rents and other receivables, net of allowance for doubtful accounts
60,100

 
59,429

 
57,076

 
57,704

 
56,861

Prepaid expenses and other assets
108,591

 
109,885

 
114,541

 
120,486

 
115,192

Other assets related to properties sold or held for sale
—

 
—

 
258

 
693

 
1,292

Total assets
$
2,080,742

 
$
2,096,120

 
$
2,124,376

 
$
2,198,795

 
$
2,153,671

Liabilities
 
 
 
 
 
 
 
 
 
Notes payable
$
846,450

 
$
846,323

 
$
906,190

 
$
906,058

 
$
607,653

Mortgage notes payable
312,211

 
312,396

 
342,970

 
398,511

 
420,898

Lines of credit
75,000

 
70,000

 
—

 
—

 
221,000

Accounts payable and other liabilities
51,715

 
57,523

 
52,823

 
54,916

 
54,304

Advance rents
14,239

 
15,203

 
16,096

 
13,829

 
15,104

Tenant security deposits
9,899

 
9,849

 
9,936

 
9,771

 
9,671

Other liabilities related to properties sold or held for sale
—

 
—

 
218

 
4,646

 
4,826

Total liabilities
1,309,514

 
1,311,294

 
1,328,233

 
1,387,731

 
1,333,456

Equity
 
 
 
 
 
 
 
 
 
Preferred shares; $0.01 par value; 10,000 shares authorized
—

 
—

 
—

 
—

 
—

Shares of beneficial interest, $0.01 par value; 100,000 shares authorized
665

 
665

 
664

 
662

 
662

Additional paid-in capital
1,147,710

 
1,146,683

 
1,145,515

 
1,143,554

 
1,142,391

Distributions in excess of net income
(381,623
)
 
(366,821
)
 
(354,122
)
 
(337,151
)
 
(326,714
)
Total shareholders' equity
766,752

 
780,527

 
792,057

 
807,065

 
816,339

Noncontrolling interests in subsidiaries
4,476

 
4,299

 
4,086

 
3,999

 
3,876

Total equity
771,228

 
784,826

 
796,143

 
811,064

 
820,215

Total liabilities and equity
$
2,080,742

 
$
2,096,120

 
$
2,124,376

 
$
2,198,795

 
$
2,153,671

Total Debt / Total Market Capitalization
0.41
:1
 
0.40
:1
 
0.42
:1
 
0.42
:1
 
0.40
:1

5



Funds from Operations
(In thousands, except per share data)
(Unaudited)

 
Three Months Ended
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Funds from operations(1)
 
 
 
 
 
 
 
 
 
Net income
$
5,263

 
$
7,335

 
$
2,958

 
$
9,561

 
$
6,008

Real estate depreciation and amortization
25,582

 
25,524

 
26,131

 
26,127

 
25,227

Discontinued operations:
 
 
 
 
 
 
 
 
 
Gain on sale of real estate
—

 
(3,195
)
 
(1,400
)
 
(3,724
)
 
—

Real estate depreciation and amortization
—

 
—

 
—

 
91

 
364

Funds from operations (FFO)
30,845

 
29,664

 
27,689

 
32,055

 
31,599

Real estate impairment
—

 
—

 
2,097

 
—

 
—

Severance expense
266

 
(183
)
 
1,583

 
—

 
—

Acquisition costs
87

 
213

 
90

 
(164
)
 
254

Core FFO (1)
$
31,198

 
$
29,694

 
$
31,459

 
$
31,891

 
$
31,853

 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
(142
)
 
(120
)
 
(93
)
 
(125
)
 
(176
)
 
 
 
 
 
 
 
 
 
 
FFO per share - basic
$
0.46

 
$
0.44

 
$
0.42

 
$
0.48

 
$
0.47

FFO per share - fully diluted
$
0.46

 
$
0.44

 
$
0.42

 
$
0.48

 
$
0.47

Core FFO per share - fully diluted
$
0.47

 
$
0.44

 
$
0.47

 
$
0.48

 
$
0.48

 
 
 
 
 
 
 
 
 
 
Common dividend per share
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.43375

 
 
 
 
 
 
 
 
 
 
Average shares - basic
66,405

 
66,393

 
66,273

 
66,246

 
66,241

Average shares - fully diluted
66,556

 
66,519

 
66,416

 
66,379

 
66,380

(1)  See "Supplemental Definitions" on page 30 of this supplemental for the definitions of FFO and Core FFO.
(2)  Adjustment to the numerators for FFO and Core FFO per share calculations when applying the two-class method for calculating EPS.


6



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

 
Three Months Ended
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Funds available for distribution(1)
 
 
 
 
 
 
 
 
 
FFO
$
30,845

 
$
29,664

 
$
27,689

 
$
32,055

 
$
31,599

Tenant improvements
(5,918
)
 
(3,975
)
 
(4,901
)
 
(5,216
)
 
(2,357
)
Leasing commissions and incentives
(2,342
)
 
(2,606
)
 
(2,334
)
 
(2,144
)
 
(2,122
)
Recurring capital improvements
(2,311
)
 
(721
)
 
(1,414
)
 
(1,362
)
 
(2,992
)
Straight-line rent, net
(483
)
 
(343
)
 
(738
)
 
(847
)
 
(688
)
Non-cash fair value interest expense
255

 
254

 
253

 
216

 
229

Non-real estate depreciation and amortization
933

 
958

 
911

 
987

 
948

Amortization of lease intangibles, net
86

 
41

 
41

 
(32
)
 
(3
)
Amortization and expensing of restricted share and unit compensation
1,355

 
1,018

 
1,842

 
1,206

 
1,333

Real estate impairment
—

 
—

 
2,097

 
—

 
—

Funds available for distribution (FAD)
22,420

 
24,290

 
23,446

 
24,863

 
25,947

Non-share-based severance expense
—

 
—

 
850

 
—

 
—

Acquisition costs
87

 
213

 
90

 
(164
)
 
254

Core FAD (1)
$
22,507

 
$
24,503

 
$
24,386

 
$
24,699

 
$
26,201

 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
(142
)
 
(120
)
 
(93
)
 
(125
)
 
(176
)
 
 
 
 
 
 
 
 
 
 
FAD per share - basic
$
0.34

 
$
0.36

 
$
0.35

 
$
0.37

 
$
0.39

FAD per share - fully diluted
$
0.33

 
$
0.36

 
$
0.35

 
$
0.37

 
$
0.39

Core FAD per share - fully diluted
$
0.34

 
$
0.37

 
$
0.37

 
$
0.37

 
$
0.39

 
 
 
 
 
 
 
 
 
 
Common dividend per share
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.43375

 
 
 
 
 
 
 
 
 
 
Average shares - basic
66,405

 
66,393

 
66,273

 
66,246

 
66,241

Average shares - fully diluted
66,556

 
66,519

 
66,416

 
66,379

 
66,380

(1)  See "Supplemental Definitions" on page 30 of this supplemental for the definitions of FAD and Core FAD.
(2)  Adjustment to the numerators for FAD and Core FAD per share calculations when applying the two-class method for calculating EPS.


7



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

 
Three Months Ended
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Adjusted EBITDA (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
5,263

 
$
7,335

 
$
2,958

 
$
9,561

 
$
6,008

Add:
 
 
 
 
 
 
 
 
 
Interest expense, including discontinued operations
16,152

 
16,518

 
17,481

 
16,049

 
15,533

Real estate depreciation and amortization, including discontinued operations
25,582

 
25,524

 
26,131

 
26,218

 
25,591

Income tax expense
24

 
—

 
57

 
17

 
158

Real estate impairment
—

 
—

 
2,097

 
—

 
—

Non-real estate depreciation
215

 
196

 
131

 
254

 
261

Less:
 
 
 
 
 
 
 
 
 
    Gain on sale of real estate
—

 
(3,195
)
 
(1,400
)
 
(3,724
)
 
—

Adjusted EBITDA
$
47,236

 
$
46,378

 
$
47,455

 
$
48,375

 
$
47,551

 
 
 
 
 
 
 
 
 
 
(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.



8



Long Term Debt Analysis
($'s in thousands)

 
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Balances Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Conventional fixed rate
$
312,211

 
$
312,396

 
$
342,970

 
$
402,857

 
$
425,268

Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds and notes
846,450

 
846,323

 
906,190

 
906,058

 
607,653

Credit facility
75,000

 
70,000

 
—

 
—

 
221,000

Unsecured total
921,450

 
916,323

 
906,190

 
906,058

 
828,653

Total
$
1,233,661

 
$
1,228,719

 
$
1,249,160

 
$
1,308,915

 
$
1,253,921

 
 
 
 
 
 
 
 
 
 
Average Interest Rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Conventional fixed rate
6.1
%
 
6.1
%
 
6.1
%
 
6.0
%
 
5.9
%
Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds
4.9
%
 
4.9
%
 
4.9
%
 
4.9
%
 
5.4
%
Credit facilities
1.4
%
 
1.4
%
 
—
%
 
—
%
 
1.3
%
Unsecured total
4.6
%
 
4.7
%
 
4.9
%
 
4.9
%
 
4.3
%
Average
5.0
%
 
5.0
%
 
5.3
%
 
5.3
%
 
4.9
%

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 $3.0 million and $3.6 million, respectively.


    

9


Long Term Debt Maturities
(in thousands, except average interest rates)
, except per share data)

Future Maturities of Debt
Year
Secured Debt
 
Unsecured Debt
 
Credit Facilities
 
Total Debt
 
Average Interest Rate
2013
—

 
—

 
—

 
—

 

2014
—

 
100,000

 
—

 
100,000

 
5.3%
2015
18,510

 
150,000

 
15,000

 
183,510

 
5.1%
2016
132,137

 
—

 
60,000

 
192,137

 
4.4%
2017
101,866

 
—

 
—

 
101,866

 
7.3%
2018
—

 
—

 
—

 
—

 

2019
31,280

 
—

 
—

 
31,280

 
5.4%
2020
—

 
250,000

 
—

 
250,000

 
5.1%
2021
—

 
—

 
—

 
—

 

2022
—

 
300,000

 
—

 
300,000

 
4.0%
2023
—

 
—

 
—

 
—

 

Thereafter
—

 
50,000

 
—

 
50,000

 
7.4%
Scheduled principal payments
$
283,793

 
$
850,000

 
$
75,000

 
$
1,208,793

 
5.0%
Scheduled amortization payments
31,459

 
—

 
—

 
31,459

 
5.2%
Net discounts/premiums
(3,041
)
 
(3,550
)
 
—

 
(6,591
)
 
 
Total maturities
$
312,211

 
$
846,450

 
$
75,000

 
$
1,233,661

 
5.0%
Weighted average maturity =5.8 years

10



Debt Covenant Compliance

 
Unsecured Notes Payable
 
Unsecured Line of Credit #1
($100.0 million)
 
Unsecured Line of Credit #2
($400.0 million)
 
Quarter Ended June 30, 2013
 
Covenant
 
Quarter Ended June 30, 2013
 
Covenant
 
Quarter Ended June 30, 2013
 
Covenant
% of Total Indebtedness to Total Assets(1)
43.6
%
 
≤ 65.0%
 
 N/A

 
N/A
 
 N/A

 
N/A
Ratio of Income Available for Debt Service to Annual Debt Service
3.0

 
≥ 1.5
 
 N/A

 
N/A
 
 N/A

 
N/A
% of Secured Indebtedness to Total Assets(1)
11.0
%
 
≤ 40.0%
 
 N/A

 
N/A
 
 N/A

 
N/A
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness
2.5

 
≥ 1.5
 
 N/A

 
N/A
 
 N/A

 
N/A
Tangible Net Worth(3)
 N/A

 
N/A
 
$861.4 million

 
≥ $673.4 million
 
$862.6 million

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

 
N/A
 
50.7
%
 
≤ 60.0%
 
50.7
%
 
≤ 60.0%
% of Secured Indebtedness to Gross Asset Value(5)
 N/A

 
N/A
 
12.1
%
 
≤ 35.0%
 
12.1
%
 
≤ 35.0%
Ratio of EBITDA(4) to Fixed Charges(6)
 N/A

 
N/A
 
2.67

 
≥ 1.50
 
2.67

 
≥ 1.50
Ratio of Unencumbered Pool Value(7) to Unsecured Indebtedness
 N/A

 
N/A
 
2.29

 
≥ 1.67
 
2.29

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

 
N/A
 
3.44

 
≥ 2.00
 
3.44

 
≥ 2.00
Ratio of Investments(8) to Gross Asset Value(5)
 N/A

 
N/A
 
3.4
%
 
≤ 15.0%
 
3.4
%
 
≤ 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) Unencumbered Pool Value is calculated by applying a capitalization rate of 7.50% 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.
(8) Investments is defined as development in progress, including land held for development, plus budgeted development costs upon commencement of construction, if any.

11


        

Capital Analysis
(In thousands, except per share amounts)
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Market Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares Outstanding
66,500

 
66,485

 
66,437

 
66,325

 
66,321

Market Price per Share
$
26.91

 
$
27.84

 
$
26.15

 
$
26.82

 
$
28.45

Equity Market Capitalization
$
1,789,515

 
$
1,850,942

 
$
1,737,328

 
$
1,778,837

 
$
1,886,832

 
 
 
 
 
 
 
 
 
 
Total Debt
$
1,233,661

 
$
1,228,719

 
$
1,249,160

 
$
1,308,915

 
$
1,253,921

Total Market Capitalization
$
3,023,176

 
$
3,079,661

 
$
2,986,488

 
$
3,087,752

 
$
3,140,753

 
 
 
 
 
 
 
 
 
 
Total Debt to Market Capitalization
0.41
:1
 
0.40
:1
 
0.42
:1
 
0.42
:1
 
0.40
:1
 
 
 
 
 
 
 
 
 
 
Earnings to Fixed Charges(1)
1.3x

 
1.2x

 
1.0x

 
1.3x

 
1.3x

Debt Service Coverage Ratio(2)
2.8x

 
2.7x

 
2.6x

 
2.8x

 
2.8x

 
 
 
 
 
 
 
 
 
 
Dividend Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Dividends Paid
$
20,065

 
$
20,034

 
$
19,928

 
$
19,998

 
$
28,772

Common Dividend per Share
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.43375

Payout Ratio (Core FFO per share basis)
63.8
%
 
68.2
%
 
63.8
%
 
62.5
%
 
90.4
%
Payout Ratio (Core FAD per share basis)
88.2
%
 
81.1
%
 
81.1
%
 
81.1
%
 
111.2
%
Payout Ratio (FAD per share basis)
90.9
%
 
83.3
%
 
85.7
%
 
81.1
%
 
111.2
%
 
 
 
 
 
 
 
 
 
 
(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 8) by interest expense and principal amortization.


12



Same-Store Portfolio Net Operating Income (NOI) Growth & Rental Growth
2013 vs. 2012

 
Three Months Ended June 30, (1)
 
 
 
 
 
2013
 
2012
 
% Change
 
Rental Rate Growth
Cash Basis:
 
 
 
 
 
 
 
Multifamily
$
7,755

 
$
7,804

 
(0.6
)%
 
3.8
%
Office Buildings
23,770

 
24,054

 
(1.2
)%
 
2.5
%
Medical Office Buildings
7,105

 
7,068

 
0.5
 %
 
1.9
%
Retail Centers
10,811

 
10,782

 
0.3
 %
 
4.6
%
Overall Same-Store Portfolio (1)
$
49,441

 
$
49,708

 
(0.5
)%
 
3.0
%
 
 
 
 
 
 
 
 
GAAP Basis:
 
 
 
 
 
 
 
Multifamily
$
7,893

 
$
7,998

 
(1.3
)%
 
3.8
%
Office Buildings
23,708

 
24,224

 
(2.1
)%
 
1.7
%
Medical Office Buildings
7,490

 
7,253

 
3.3
 %
 
1.4
%
Retail Centers
10,698

 
10,940

 
(2.2
)%
 
4.1
%
Overall Same-Store Portfolio (1)
$
49,789

 
$
50,415

 
(1.2
)%
 
2.4
%

(1)  Non same-store properties were:
Acquisitions:
Office - Fairgate at Ballston
Medical Office - 19500 at Riverside Office Park (formerly Lansdowne Medical Office Building)
Held for sale and sold properties:
Office - 1700 Research Boulevard and the Atrium Building
Medical Office - Plumtree Medical Center


13



Same-Store Portfolio Net Operating Income (NOI) Detail
(In thousands)
 
Three Months Ended June 30, 2013
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
13,399

 
$
38,200

 
$
10,654

 
$
14,281

 
$
—

 
$
76,534

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

 
1,382

 
356

 
—

 
—

 
1,738

Total
13,399

 
39,582

 
11,010

 
14,281

 
—

 
78,272

Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
5,506

 
14,492

 
3,164

 
3,583

 
—

 
26,745

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

 
532

 
152

 
—

 
—

 
684

Total
5,506

 
15,024

 
3,316

 
3,583

 
—

 
27,429

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
7,893

 
23,708

 
7,490

 
10,698

 
—

 
49,789

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

 
850

 
204

 
—

 
—

 
1,054

Total
$
7,893

 
$
24,558

 
$
7,694

 
$
10,698

 
$
—

 
$
50,843

 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
7,893

 
$
23,708

 
$
7,490

 
$
10,698

 
$
—

 
$
49,789

Straight-line revenue, net for same-store properties
—

 
(177
)
 
(342
)
 
137

 
—

 
(382
)
FAS 141 Min Rent
(138
)
 
52

 
(58
)
 
(82
)
 
—

 
(226
)
Amortization of lease intangibles for same-store properties
—

 
187

 
15

 
58

 
—

 
260

Same-store portfolio NOI, cash basis
$
7,755

 
$
23,770

 
$
7,105

 
$
10,811

 
$
—

 
$
49,441

Reconciliation of NOI to net income
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
7,893

 
$
24,558

 
$
7,694

 
$
10,698

 
—

 
$
50,843

Depreciation and amortization
(2,967
)
 
(14,995
)
 
(3,927
)
 
(3,407
)
 
(286
)
 
(25,582
)
General and administrative
—

 
—

 
—

 
—

 
(4,005
)
 
(4,005
)
Interest expense
(1,687
)
 
(2,569
)
 
(328
)
 
(270
)
 
(11,298
)
 
(16,152
)
Other income
—

 
—

 
—

 
—

 
246

 
246

Acquisition costs
—

 
—

 
—

 
—

 
(87
)
 
(87
)
Net income (loss)
3,239

 
6,994

 
3,439

 
7,021

 
(15,430
)
 
5,263

Net income attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

Net income attributable to the controlling interests
$
3,239

 
$
6,994

 
$
3,439

 
$
7,021

 
$
(15,430
)
 
$
5,263

(1)  For a list of non-same-store properties and held for sale and sold properties, see page 13 of this Supplemental.

14



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
Three Months Ended June 30, 2012
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
13,096

 
$
37,317

 
$
10,814

 
$
13,970

 
$
—

 
$
75,197

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

 
134

 
259

 
—

 
—

 
393

                         Total
13,096

 
37,451

 
11,073

 
13,970

 
—

 
75,590

 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
5,098

 
13,093

 
3,561

 
3,030

 
—

 
24,782

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

 
82

 
169

 
—

 
—

 
251

                         Total
5,098

 
13,175

 
3,730

 
3,030

 
—

 
25,033

 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
7,998

 
24,224

 
7,253

 
10,940

 
—

 
50,415

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

 
52

 
90

 
—

 
—

 
142

                          Total
$
7,998

 
$
24,276

 
$
7,343

 
$
10,940

 
$
—

 
$
50,557

 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
7,998

 
$
24,224

 
$
7,253

 
$
10,940

 
$
—

 
$
50,415

Straight-line revenue, net for same-store properties
(3
)
 
(417
)
 
(109
)
 
(120
)
 
—

 
(649
)
FAS 141 Min Rent
(191
)
 
107

 
(88
)
 
(86
)
 
—

 
(258
)
Amortization of lease intangibles for same-store properties
—

 
140

 
12

 
48

 
—

 
200

Same-store portfolio NOI, cash basis
$
7,804

 
$
24,054

 
$
7,068

 
$
10,782

 
$
—

 
$
49,708

 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
7,998

 
$
24,276

 
$
7,343

 
$
10,940

 
—

 
$
50,557

Depreciation and amortization
(3,164
)
 
(14,352
)
 
(3,874
)
 
(3,560
)
 
(277
)
 
(25,227
)
General and administrative
—

 
—

 
—

 
—

 
(4,164
)
 
(4,164
)
Interest expense
(1,695
)
 
(3,037
)
 
(1,098
)
 
(596
)
 
(9,044
)
 
(15,470
)
Other income
—

 
—

 
—

 
—

 
252

 
252

Acquisition costs
—

 
—

 
—

 
—

 
(254
)
 
(254
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale (1)
—

 
299

 
15

 
—

 
—

 
314

Net income (loss)
3,139

 
7,186

 
2,386

 
6,784

 
(13,487
)
 
6,008

Net income attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

Net income attributable to the controlling interests
$
3,139

 
$
7,186

 
$
2,386

 
$
6,784

 
$
(13,487
)
 
$
6,008

(1)  For a list of non-same-store properties and held for sale and sold properties, see page 13 of this Supplemental.
 
 

15



Net Operating Income (NOI) by Region
 
 
 
 
 
 
 
WRIT Portfolio
 
WRIT Portfolio
Maryland/Virginia/DC
 
Inside & Outside the Beltway
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of GAAP NOI
 
 
Percentage of GAAP NOI
 
Q2 2013
 
YTD 2013
 
 
Q2 2013
 
YTD 2013
DC
 
 
 
 
Inside the Beltway
 
 
Multifamily
3.5
%
 
3.7
%
 
Multifamily
14.6
%
 
14.8
%
Office
18.6
%
 
18.8
%
 
Office
29.0
%
 
29.2
%
Medical Office
1.9
%
 
1.8
%
 
Medical Office
3.2
%
 
3.0
%
Retail
0.8
%
 
0.8
%
 
Retail
6.1
%
 
6.1
%
 
24.8
%
 
25.1
%
 
 
52.9
%
 
53.1
%
Maryland
 
 
 
 
Outside the Beltway
 
 
Multifamily
2.4
%
 
2.4
%
 
Multifamily
0.9
%
 
0.9
%
Office
8.9
%
 
9.0
%
 
Office
19.4
%
 
19.7
%
Medical Office
3.6
%
 
3.6
%
 
Medical Office
11.9
%
 
11.5
%
Retail
14.9
%
 
14.8
%
 
Retail
14.9
%
 
14.8
%
 
29.8
%
 
29.8
%
 
 
47.1
%
 
46.9
%
Virginia
 
 
 
 
 


 


Multifamily
9.6
%
 
9.7
%
 
Total Portfolio
100.0
%
 
100.0
%
Office
20.9
%
 
20.8
%
 
 
 
 
 
Medical Office
9.6
%
 
9.3
%
 
 
 
 
 
Retail
5.3
%
 
5.3
%
 
 
 
 
 
 
45.4
%
 
45.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio
100.0
%
 
100.0
%
 
 
 
 
 

16



Same-Store and Overall Physical Occupancy Levels by Sector


 
Physical Occupancy - Same-Store Properties (1)
Sector
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Multifamily
93.1
%
 
93.8
%
 
94.1
%
 
94.8
%
 
94.8
%
Office Buildings
86.3
%
 
85.4
%
 
84.9
%
 
86.3
%
 
86.0
%
Medical Office
87.8
%
 
88.4
%
 
89.1
%
 
88.0
%
 
89.7
%
Retail Centers
93.2
%
 
92.4
%
 
91.2
%
 
92.8
%
 
93.3
%
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
89.5
%
 
89.1
%
 
88.7
%
 
89.8
%
 
89.9
%
 
 
 
 
 
 
 
 
 
 
 
Physical Occupancy - All Properties
Sector
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Multifamily
93.1
%
 
93.8
%
 
94.1
%
 
94.8
%
 
94.8
%
Office Buildings
86.3
%
 
85.4
%
 
84.5
%
 
86.2
%
 
85.8
%
Medical Office
84.8
%
 
85.2
%
 
85.6
%
 
85.0
%
 
86.4
%
Retail Centers
93.2
%
 
92.4
%
 
91.2
%
 
92.8
%
 
93.3
%
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
89.1
%
 
88.6
%
 
88.1
%
 
89.2
%
 
89.3
%

(1)  Non same-store properties were:
Acquisitions:
Office - Fairgate at Ballston
Medical Office - 19500 at Riverside Office Park (formerly Lansdowne Medical Office Building)
Held for sale and sold properties:
Office - 1700 Research Boulevard and the Atrium Building
Medical Office - Plumtree Medical Center

17



Same-Store Portfolio and Overall Economic Occupancy Levels by Sector
 
Economic Occupancy - Same-Store Properties(1)
Sector
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Multifamily
92.7
%
 
93.1
%
 
93.5
%
 
94.1
%
 
94.1
%
Office Buildings
86.8
%
 
86.0
%
 
86.6
%
 
87.3
%
 
87.2
%
Medical Office Buildings
89.1
%
 
89.7
%
 
91.0
%
 
91.6
%
 
92.3
%
Retail Centers
92.8
%
 
91.6
%
 
92.9
%
 
94.3
%
 
93.7
%
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
89.2
%
 
88.7
%
 
89.5
%
 
90.3
%
 
90.2
%
 
 
 
 
 
 
 
 
 
 
 
Economic Occupancy - All Properties
Sector
6/30/2013
 
3/31/2013
 
12/31/2012
 
9/30/2012
 
6/30/2012
Multifamily
92.7
%
 
93.1
%
 
93.5
%
 
94.1
%
 
94.1
%
Office Buildings
86.5
%
 
85.6
%
 
86.0
%
 
87.1
%
 
87.1
%
Medical Office Buildings
87.2
%
 
87.6
%
 
88.7
%
 
89.3
%
 
90.0
%
Retail Centers
92.8
%
 
91.6
%
 
92.9
%
 
94.3
%
 
93.7
%
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
88.7
%
 
88.2
%
 
88.8
%
 
89.8
%
 
89.8
%

(1)  Non same-store properties were:
Acquisitions:
Office - Fairgate at Ballston
Medical Office - 19500 at Riverside Office Park (formerly Lansdowne Medical Office Building)
Held for sale and sold properties:
Office - 1700 Research Boulevard and the Atrium Building
Medical Office - Plumtree Medical Center


18



Disposition Summary
June 30, 2013
($'s in thousands)
0, 2012
Disposition Summary
 
 
 
 
 
 
 
 
 
 
 
 
Disposition Date
 
Property Type
 
Square Feet
 
Contract Sales Price
 
GAAP Gain
The Atrium Building
 
March 19, 2013
 
Office
 
79,000

 
$
15,750

 
$
3,195





19



Development/Re-Development Summary
June 30, 2013
($'s in thousands)

Property and Location
Total Rentable Square Feet or # of Units
Anticipated Total Cost
Cash Cost to Date
Draws on Construction Loan to Date
Anticipated Construction Completion Date
Development Summary
 
 
 
 
 
650 N. Glebe Road, Arlington, VA
163 units & 2,200 square foot retail
$49,904
$19,904
$371
fourth quarter 2014
 
 
 
 
 
 
Re-Development Summary
 
 
 
 
 
7900 Westpark Drive, McLean, VA
528,000 square foot
$35,000
$971
N/A
first quarter 2015


20



Commercial Leasing Summary - New Leases
 
2nd Quarter 2013
 
1st Quarter 2013
 
4th Quarter 2012
 
3rd Quarter 2012
 
2nd Quarter 2012
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
94,191
 
65,566
 
76,252
 
46,351
 
73,877
      Medical Office Buildings
3,082
 
15,629
 
15,083
 
17,105
 
11,334
      Retail Centers
6,240
 
46,100
 
14,419
 
7,857
 
45,584
Total
103,513

127,295
127,295

105,754
 
71,313
 
130,795
Weighted Average Term (yrs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
7.8
 
8.5
 
8.6
 
6.6
 
7.9
      Medical Office Buildings
5.4
 
7.2
 
9.3
 
9.1
 
8.4
      Retail Centers
7.1
 
7.3
 
8.0
 
8.4
 
9.0
Total
7.6
 
7.9
 
8.6
 
7.4
 
8.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
28.28

 
$
29.07

 
$
29.14

 
$
30.36

 
$
30.72

 
$
31.19

 
$
32.63

 
$
33.45

 
$
33.73

 
$
35.06

            Medical Office Buildings
31.53

 
34.17

 
33.53

 
35.53

 
30.85

 
32.40

 
26.10

 
26.59

 
32.81

 
35.85

            Retail Centers
31.31

 
31.71

 
10.26

 
10.26

 
18.49

 
18.59

 
21.39

 
21.74

 
26.27

 
26.45

Total
$
28.56

 
$
29.38

 
$
22.84

 
$
23.72

 
$
29.22

 
$
29.79

 
$
29.83

 
$
30.51

 
$
31.05

 
$
32.13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
30.34

 
$
27.53

 
$
31.96

 
$
28.86

 
$
35.41

 
$
31.66

 
$
37.20

 
$
33.72

 
$
41.78

 
$
37.91

            Medical Office Buildings
30.97

 
29.12

 
36.67

 
33.94

 
31.30

 
27.69

 
27.46

 
24.79

 
37.64

 
33.44

            Retail Centers
33.54

 
31.98

 
19.12

 
19.04

 
16.74

 
15.35

 
33.21

 
30.17

 
26.98

 
24.91

Total
$
30.55

 
$
27.84

 
$
27.89

 
$
25.93

 
$
32.61

 
$
29.22

 
$
34.43

 
$
31.18

 
$
36.26

 
$
32.99

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
7.3
 %
 
(5.3
)%
 
9.7
%
 
(4.9
)%
 
15.3
 %
 
1.5
 %
 
14.0
%
 
0.8
 %
 
23.9
%
 
8.1
 %
            Medical Office Buildings
(1.8
)%
 
(14.8
)%
 
9.4
%
 
(4.5
)%
 
1.5
 %
 
(14.5
)%
 
5.2
%
 
(6.8
)%
 
14.7
%
 
(6.7
)%
            Retail Centers
7.1
 %
 
0.8
 %
 
86.3
%
 
85.5
 %
 
(9.5
)%
 
(17.4
)%
 
55.2
%
 
38.8
 %
 
2.7
%
 
(5.8
)%
Total
7.0
 %
 
(5.3
)%
 
22.1
%
 
9.3
 %
 
11.6
 %
 
(1.9
)%
 
15.4
%
 
2.2
 %
 
16.8
%
 
2.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
Tenant Improvements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
3,285,080

 
$
34.88

 
$
2,941,901

 
$
44.87

 
$
3,186,650

 
$
41.79

 
$
1,858,979

 
$
40.11

 
$
3,703,963

 
$
50.14

Medical Office Buildings
67,248

 
21.82

 
513,774

 
32.87

 
652,831

 
43.28

 
863,148

 
50.46

 
558,491

 
49.28

Retail Centers
119,800

 
19.20

 
2,307,500

 
50.05

 
168,500

 
11.69

 
120,000

 
15.27

 
1,436,054

 
31.50

Subtotal
$
3,472,128

 
$
33.55

 
$
5,763,175

 
$
45.27

 
$
4,007,981

 
$
37.90

 
$
2,842,127

 
$
39.85

 
$
5,698,508

 
$
43.57

Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
2,173,271

 
$
23.08

 
$
2,041,020

 
$
31.13

 
$
1,569,078

 
$
20.58

 
$
1,113,305

 
$
24.02

 
$
2,569,373

 
$
34.78

Medical Office Buildings
42,827

 
13.90

 
223,311

 
14.29

 
327,649

 
21.72

 
212,409

 
12.42

 
155,136

 
13.69

Retail Centers
71,769

 
11.50

 
303,796

 
6.59

 
64,839

 
4.50

 
72,182

 
9.19

 
215,503

 
4.73

Subtotal
$
2,287,867

 
$
22.10

 
$
2,568,127

 
$
20.18

 
$
1,961,566

 
$
18.55

 
$
1,397,896

 
$
19.60

 
$
2,940,012

 
$
22.48

Tenant Improvements and Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
5,458,351

 
$
57.96

 
$
4,982,921

 
$
76.00

 
$
4,755,728

 
$
62.37

 
$
2,972,284

 
$
64.13

 
$
6,273,336

 
$
84.92

Medical Office Buildings
110,075

 
35.72

 
737,085

 
47.16

 
980,480

 
65.00

 
1,075,557

 
62.88

 
713,627

 
62.97

Retail Centers
191,569

 
30.70

 
2,611,296

 
56.64

 
233,339

 
16.19

 
192,182

 
24.46

 
1,651,557

 
36.23

Total
$
5,759,995

 
$
55.65

 
$
8,331,302

 
$
65.45

 
$
5,969,547

 
$
56.45

 
$
4,240,023

 
$
59.45

 
$
8,638,520

 
$
66.05


21



Commercial Leasing Summary - Renewal Leases
 
2nd Quarter 2013
 
1st Quarter 2013
 
4th Quarter 2012
 
3rd Quarter 2012
 
2nd Quarter 2012
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
92,245
 
192,943
 
76,772
 
99,101
 
44,425
      Medical Office Buildings
49,383
 
21,294
 
27,997
 
26,661
 
20,477
      Retail Centers
172,474
 
46,124
 
59,969
 
24,269
 
51,742
Total
314,102
 
260,361
 
164,738
 
150,031
 
116,644
Weighted Average Term (yrs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
3.5
 
2.7
 
3.9
 
3.9
 
4.0
      Medical Office Buildings
10.4
 
5.0
 
6.2
 
5.5
 
4.4
      Retail Centers
5.3
 
4.8
 
5.0
 
3.5
 
5.5
Total
5.6
 
3.3
 
4.7
 
4.1
 
4.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
30.72

 
$
32.10

 
$
29.74

 
$
31.56

 
$
29.50

 
$
30.46

 
$
32.51

 
$
34.52

 
$
30.45

 
$
32.60

            Medical Office Buildings
31.60

 
34.20

 
37.92

 
40.11

 
34.83

 
37.61

 
35.00

 
36.98

 
36.81

 
39.61

            Retail Centers
7.78

 
7.89

 
28.27

 
29.13

 
19.73

 
19.97

 
39.16

 
40.36

 
15.86

 
16.48

Total
$
18.27

 
$
19.14

 
$
30.15

 
$
31.83

 
$
26.85

 
$
27.85

 
$
34.03

 
$
35.90

 
$
24.57

 
$
26.11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
32.51

 
$
31.62

 
$
31.81

 
$
31.40

 
$
31.94

 
$
30.90

 
$
35.95

 
$
34.43

 
$
33.80

 
$
32.25

            Medical Office Buildings
35.23

 
32.72

 
39.34

 
37.20

 
37.04

 
34.30

 
37.04

 
34.56

 
39.15

 
37.29

            Retail Centers
8.74

 
8.53

 
30.40

 
29.32

 
21.48

 
21.15

 
42.86

 
41.65

 
18.00

 
16.83

Total
$
19.88

 
$
19.11

 
$
32.18

 
$
31.51

 
$
29.00

 
$
27.93

 
$
37.26

 
$
35.62

 
$
27.20

 
$
25.78

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
5.8
%
 
(1.5
)%
 
7.0
%
 
(0.5
)%
 
8.3
%
 
1.5
 %
 
10.6
%
 
(0.3
)%
 
11.0
%
 
(1.1
)%
            Medical Office Buildings
11.5
%
 
(4.3
)%
 
3.7
%
 
(7.2
)%
 
6.4
%
 
(8.8
)%
 
5.9
%
 
(6.6
)%
 
6.3
%
 
(5.9
)%
            Retail Centers
12.3
%
 
8.1
 %
 
7.5
%
 
0.7
 %
 
8.9
%
 
6.0
 %
 
9.5
%
 
3.2
 %
 
13.5
%
 
2.1
 %
Total
8.9
%
 
(0.1
)%
 
6.7
%
 
(1.0
)%
 
8.0
%
 
0.3
 %
 
9.5
%
 
(0.8
)%
 
10.7
%
 
(1.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
Tenant Improvements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
565,393

 
$
6.12

 
$
1,035,279

 
$
5.37

 
$
801,452

 
$
10.44

 
$
1,155,918

 
$
11.66

 
$
575,040

 
$
12.94

Medical Office Buildings
639,396

 
12.94

 
189,280

 
8.89

 
520,981

 
18.61

 
347,034

 
13.02

 
225,037

 
10.99

Retail Centers
65,261

 
0.38

 
—

 
—

 
—

 
—

 
—

 
—

 
33,000

 
0.64

Subtotal
$
1,270,050

 
$
4.04

 
$
1,224,559

 
$
4.70

 
$
1,322,433

 
$
8.03

 
$
1,502,952

 
$
10.02

 
$
833,077

 
$
7.14

Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
220,889

 
$
2.40

 
$
454,823

 
$
2.35

 
$
377,421

 
$
4.92

 
$
1,047,935

 
$
10.57

 
$
285,263

 
$
6.42

Medical Office Buildings
125,662

 
2.55

 
125,097

 
5.87

 
290,596

 
10.38

 
219,670

 
8.24

 
76,987

 
3.76

Retail Centers
82,993

 
0.48

 
75,176

 
1.63

 
29,104

 
0.49

 
23,021

 
0.95

 
41,593

 
0.80

Subtotal
$
429,544

 
$
1.37

 
$
655,096

 
$
2.52

 
$
697,121

 
$
4.23

 
$
1,290,626

 
$
8.60

 
$
403,843

 
$
3.46

Tenant Improvements and Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
786,282

 
$
8.52

 
$
1,490,102

 
$
7.72

 
$
1,178,873

 
$
15.36

 
$
2,203,853

 
$
22.23

 
$
860,303

 
$
19.36

Medical Office Buildings
765,058

 
15.49

 
314,377

 
14.76

 
811,577

 
28.99

 
566,704

 
21.26

 
302,024

 
14.75

Retail Centers
148,254

 
0.86

 
75,176

 
1.63

 
29,104

 
0.49

 
23,021

 
0.95

 
74,593

 
1.44

Total
$
1,699,594

 
$
5.41

 
$
1,879,655

 
$
7.22

 
$
2,019,554

 
$
12.26

 
$
2,793,578

 
$
18.62

 
$
1,236,920

 
$
10.60


22



10 Largest Tenants - Based on Annualized Rent
June 30, 2013
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
 
24

 
5.15
%
 
210,354

 
2.96
%
Advisory Board Company
1
 
71

 
2.93
%
 
180,925

 
2.55
%
Booz Allen Hamilton, Inc.
1
 
31

 
2.38
%
 
222,989

 
3.14
%
Engility Corporation
1
 
51

 
2.27
%
 
140,400

 
1.98
%
INOVA Health System
7
 
39

 
2.00
%
 
109,832

 
1.55
%
Patton Boggs LLP
1
 
46

 
2.12
%
 
110,566

 
1.56
%
Sunrise Assisted Living, Inc.
1
 
12

 
1.68
%
 
115,289

 
1.62
%
General Services Administration
4
 
57

 
1.34
%
 
66,170

 
0.93
%
General Dynamics
2
 
12

 
1.23
%
 
88,359

 
1.25
%
Epstein, Becker & Green, P.C.
1
 
42

 
1.15
%
 
53,427

 
0.75
%
Total/Weighted Average
 
 
39

 
22.25
%
 
1,298,311

 
18.29
%



23



Industry Diversification
June 30, 2013
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
$
70,867,396

 
32.24
%
 
2,193,454

 
30.35
%
Ambulatory Health Care Services
39,808,192

 
18.11
%
 
1,144,071

 
15.83
%
Credit Intermediation and Related Activities
17,486,417

 
7.95
%
 
335,595

 
4.64
%
Religious, Grantmaking, Civic, Professional, and Similar Organizations
9,381,544

 
4.27
%
 
270,769

 
3.75
%
Food Services and Drinking Places
8,309,728

 
3.78
%
 
265,412

 
3.67
%
Executive, Legislative, and Other General Government Support
6,193,376

 
2.82
%
 
179,925

 
2.49
%
Educational Services
6,123,244

 
2.79
%
 
202,416

 
2.80
%
Food and Beverage Stores
5,647,393

 
2.57
%
 
313,061

 
4.33
%
Administrative and Support Services
4,443,097

 
2.02
%
 
122,337

 
1.69
%
Nursing and Residential Care Facilities
3,847,552

 
1.75
%
 
121,649

 
1.68
%
Health and Personal Care Stores
3,589,866

 
1.63
%
 
105,454

 
1.46
%
Broadcasting (except Internet)
3,270,153

 
1.49
%
 
89,702

 
1.24
%
Miscellaneous Store Retailers
3,113,922

 
1.42
%
 
169,038

 
2.34
%
Sporting Goods, Hobby, Book, and Music Stores
3,037,386

 
1.38
%
 
194,094

 
2.69
%
Furniture and Home Furnishings Stores
3,002,949

 
1.37
%
 
151,672

 
2.10
%
Electronics and Appliance Stores
2,927,461

 
1.33
%
 
166,290

 
2.30
%
Personal and Laundry Services
2,858,792

 
1.30
%
 
88,449

 
1.22
%
Clothing and Clothing Accessories Stores
2,785,831

 
1.27
%
 
139,623

 
1.93
%
Amusement, Gambling, and Recreation Industries
1,982,321

 
0.90
%
 
99,338

 
1.37
%
Hospitals
1,915,033

 
0.87
%
 
50,376

 
0.70
%
General Merchandise Stores
1,875,727

 
0.85
%
 
221,503

 
3.07
%
Publishing Industries (except Internet)
1,545,824

 
0.70
%
 
53,142

 
0.74
%
Real Estate
1,438,929

 
0.66
%
 
44,374

 
0.61
%
Telecommunications
1,349,030

 
0.61
%
 
36,127

 
0.50
%
Printing and Related Support Activities
1,207,035

 
0.55
%
 
48,775

 
0.68
%
Computer and Electronic Product Manufacturing
1,203,873

 
0.55
%
 
41,689

 
0.58
%


24



Industry Diversification (continued)
June 30, 2013


Industry Classification (NAICS)
Annualized Base Rental Revenue
 
Percentage of Aggregate Annualized Rent
 
Aggregate Rentable Square Feet
 
Percentage of Aggregate Square Feet
Securities, Commodity Contracts, and Other Financial Investments and Related Activities
1,202,287

 
0.55
%
 
41,231

 
0.57
%
Merchant Wholesalers, Durable Goods
860,016

 
0.39
%
 
45,750

 
0.63
%
Construction of Buildings
778,617

 
0.35
%
 
28,912

 
0.40
%
Insurance Carriers and Related Activities
681,284

 
0.31
%
 
23,173

 
0.32
%
Social Assistance
593,818

 
0.27
%
 
19,241

 
0.27
%
Transportation Equipment Manufacturing
526,793

 
0.24
%
 
19,864

 
0.28
%
Motor Vehicle and Parts Dealers
479,633

 
0.22
%
 
30,031

 
0.42
%
Merchant Wholesalers, Nondurable Goods
453,827

 
0.21
%
 
27,786

 
0.38
%
Other
5,054,896

 
2.28
%
 
143,289

 
1.97
%
Total
219,843,242

 
100.00
%
 
7,227,612

 
100.00
%


25



Lease Expirations
June 30, 2013
Year
Number of Leases
 
Rentable Square Feet
 
Percent of Rentable Square Feet
 
Annualized Rent *
 
Average Rental Rate
 
Percent of Annualized Rent *
Office:
 
 
 
 
 
 
 
 
 
 
 
2013
46

 
132,096

 
3.20
%
 
$
4,376,185

 
$
33.13

 
2.84
%
2014
101

 
871,812

 
21.10
%
 
29,984,844

 
34.39

 
19.45
%
2015
94

 
567,655

 
13.74
%
 
23,135,548

 
40.76

 
15.01
%
2016
92

 
591,917

 
14.33
%
 
18,781,116

 
31.73

 
12.19
%
2017
70

 
512,695

 
12.41
%
 
20,171,086

 
39.34

 
13.09
%
2018 and thereafter
196

 
1,454,756

 
35.22
%
 
57,687,726

 
39.65

 
37.42
%
 
599

 
4,130,931

 
100.00
%
 
$
154,136,505

 
37.31

 
100.00
%
Medical Office:
 
 
 
 
 
 
 
 
 
 
 
2013
29

 
80,308

 
7.32
%
 
$
2,851,462

 
35.51

 
6.42
%
2014
57

 
163,483

 
14.90
%
 
6,419,951

 
39.27

 
14.46
%
2015
32

 
88,185

 
8.04
%
 
3,559,891

 
40.37

 
8.02
%
2016
45

 
143,467

 
13.08
%
 
5,649,920

 
39.38

 
12.72
%
2017
44

 
133,359

 
12.15
%
 
5,414,278

 
40.60

 
12.19
%
2018 and thereafter
125

 
488,484

 
44.51
%
 
20,509,316

 
41.99

 
46.19
%
 
332

 
1,097,286

 
100.00
%
 
$
44,404,818

 
40.47

 
100.00
%
Retail:
 
 
 
 
 
 
 
 
 
 
 
2013
27

 
142,117

 
6.79
%
 
$
2,436,833

 
17.15

 
5.26
%
2014
45

 
150,238

 
7.18
%
 
3,405,724

 
22.67

 
7.36
%
2015
47

 
344,561

 
16.46
%
 
6,910,034

 
20.05

 
14.93
%
2016
25

 
199,264

 
9.52
%
 
4,199,335

 
21.07

 
9.07
%
2017
37

 
230,273

 
11.00
%
 
6,305,203

 
27.38

 
13.62
%
2018 and thereafter
107

 
1,027,401

 
49.05
%
 
23,041,349

 
22.43

 
49.76
%
 
288

 
2,093,854

 
100.00
%
 
$
46,298,478

 
22.11

 
100.00
%
Total:
 
 
 
 
 
 
 
 
 
 
 
2013
102

 
354,521

 
4.84
%
 
$
9,664,480

 
27.26

 
3.95
%
2014
203

 
1,185,533

 
16.19
%
 
39,810,519

 
33.58

 
16.26
%
2015
173

 
1,000,401

 
13.66
%
 
33,605,473

 
33.59

 
13.73
%
2016
162

 
934,648

 
12.77
%
 
28,630,371

 
30.63

 
11.69
%
2017
151

 
876,327

 
11.97
%
 
31,890,567

 
36.39

 
13.03
%
2018 and thereafter
428

 
2,970,641

 
40.57
%
 
101,238,391

 
34.08

 
41.34
%
 
1,219

 
7,322,071

 
100.00
%
 
$
244,839,801

 
33.44

 
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.
 
 

26



Schedule of Properties
June 30, 2013
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET
Office Buildings
 
 
 
 
 
 
 
 
1901 Pennsylvania Avenue
 
Washington, DC
 
1977
 
1960
 
101,000

51 Monroe Street
 
Rockville, MD
 
1979
 
1975
 
220,000

515 King Street
 
Alexandria, VA
 
1992
 
1966
 
75,000

6110 Executive Boulevard
 
Rockville, MD
 
1995
 
1971
 
203,000

1220 19th Street
 
Washington, DC
 
1995
 
1976
 
104,000

1600 Wilson Boulevard
 
Arlington, VA
 
1997
 
1973
 
168,000

7900 Westpark Drive
 
McLean, VA
 
1997
 
1972/1986/1999
 
528,000

600 Jefferson Plaza
 
Rockville, MD
 
1999
 
1985
 
114,000

Wayne Plaza
 
Silver Spring, MD
 
2000
 
1970
 
96,000

Courthouse Square
 
Alexandria, VA
 
2000
 
1979
 
115,000

One Central Plaza
 
Rockville, MD
 
2001
 
1974
 
266,000

1776 G Street
 
Washington, DC
 
2003
 
1979
 
263,000

6565 Arlington Boulevard
 
Falls Church, VA
 
2006
 
1967/1998
 
138,000

West Gude Drive
 
Rockville, MD
 
2006
 
1984/1986/1988
 
277,000

Monument II
 
Herndon, VA
 
2007
 
2000
 
207,000

Woodholme Center
 
Pikesville, MD
 
2007
 
1989
 
74,000

2000 M Street
 
Washington, DC
 
2007
 
1971
 
228,000

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
 
184,000

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

Fairgate at Ballston
 
Arlington, VA
 
2012
 
1988
 
142,000

Subtotal
 
 
 
 
 
 
 
4,763,000


27



Schedule of Properties (continued)
June 30, 2013
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET
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
 
52,000

Alexandria Professional Center
 
Alexandria, VA
 
2006
 
1968
 
115,000

9707 Medical Center Drive
 
Rockville, MD
 
2006
 
1994
 
39,000

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

15005 Shady Grove Road
 
Rockville, MD
 
2006
 
2002
 
51,000

2440 M Street
 
Washington, DC
 
2007
 
1986/2006
 
113,000

Woodholme Medical Office Building
 
Pikesville, MD
 
2007
 
1996
 
128,000

Ashburn Office Park
 
Ashburn, VA
 
2007
 
1998/2000/2002
 
74,000

CentreMed I & II
 
Centreville, VA
 
2007
 
1998
 
53,000

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

19500 at Riverside Office Park (formerly Lansdowne Medical Office Building)
 
Leesburg, VA
 
2009
 
2009
 
87,000

Subtotal
 
 
 
 
 
 
 
1,290,000



28



Schedule of Properties (continued)
June 30, 2013
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET (1)
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 Shopping Center
 
Alexandria, VA
 
1984
 
1955
 
168,000

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

Montgomery Village Center
 
Gaithersburg, MD
 
1992
 
1969
 
197,000

Shoppes of Foxchase
 
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
 
199,000

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
 
157,000

Bethesda Hill Apartments / 195
 
Bethesda, MD
 
1997
 
1986
 
225,000

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)
 
 
 
 
 
 
 
2,137,000

 
 
 
 
 
 
 
 
 
TOTAL
 
 
 
 
 
 
 
10,639,000

(1) Multifamily buildings are presented in gross square feet.

29



Supplemental Definitions
June 30, 2013

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 divided by the sum of total debt 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 and 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) costs related to the acquisition of properties, (3) severance expense related to corporate reorganization and related to the CEO's retirement 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 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 , (7) real estate impairment and (8) 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) costs related to the acquisition of properties, (3) non-share-based severance expense related to corporate reorganization and related to the CEO's retirement not already excluded from FAD and (4) property impairments not already excluded from FAD, 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 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.
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.

30