Fourth 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
Fourth 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, retail, and multifamily properties and land for development.

2013 Highlights

2013 marked a year of transition for WRIT, as the company recycled out of non-core assets and continued to improve the quality of its portfolio by acquiring a well-located apartment building near Metro in the Crystal City submarket of Arlington, Virginia, and modernized existing properties improving tenant satisfaction and retention.

WRIT posted same-store GAAP rental rate growth of 2.2% and executed over 1.7 million square feet of commercial lease transactions. This is the highest annual amount of commercial leasing since 2007.

Paul T. McDermott became the company's new President and Chief Executive Officer. Mr. McDermott also serves on the Board of Trustees.

During the year, WRIT announced a $35 million renovation of 7900 Westpark Drive, a 530,000 square foot office complex located in Tysons Corner, Virginia. The renovation will reposition the property to take advantage of its close proximity to the newly constructed I-495 Express Lanes and soon to be completed Tysons I & II Metro Stations (Silver Line).

Fourth Quarter 2013 Update and Recent Activity

During the fourth quarter, WRIT acquired The Paramount, a 135 unit apartment building located in Arlington, Virginia, for $48.2 million in an all cash transaction. The Paramount is a well-located apartment building within walking distance to both the Crystal City and Pentagon City Metro Stations (Blue and Yellow lines).

In the fourth quarter and subsequent to quarter end, WRIT completed four separate sale transactions totaling 1.5 million square feet of The Medical Office Portfolio. The aggregate sale proceeds for the four transactions were $500.8 million and the sole buyer in these transactions was Harrison Street Real Estate Capital, LLC.

During the fourth quarter, WRIT paid down $135 million on its line of credit balance using sale proceeds from its medical office portfolio. Subsequent to quarter end, WRIT repaid its $100 million, 5.25% unsecured note using sale proceeds from its medical office portfolio.

WRIT signed commercial leases totaling approximately 423,000 square feet, including 171,000 square feet of new leases and 252,000 square feet of renewal leases. New leases had an average rental rate increase of 7.8% over expiring lease rates on a GAAP basis and an average lease term of 7.3 years. Commercial tenant improvements costs were $37.80 per square foot and leasing commissions and incentives were $27.03 per square foot for new leases. Renewal leases had an average rental rate increase of 15.5% over expiring lease rates on a GAAP basis and an average lease term of 6.8 years. Commercial tenant improvements costs were $30.74 per square foot and leasing commissions and incentives were $16.80 per square foot for renewal leases.

As of December 31, 2013, WRIT owned a diversified portfolio of 56 properties totaling approximately 7 million square feet of commercial space and 2,674 multifamily units, and land held for development. These 56 properties consist of 23 office properties, 5 medical office properties, 16 retail centers and 12 multifamily properties. WRIT shares are publicly traded on the New York Stock Exchange (NYSE: WRE).




Company Background and Highlights
Fourth Quarter 2013

Net Operating Income Contribution by Sector - Fourth Quarter 2013

Note: Excludes held for sale properties: Medical Office Portfolio (see Supplemental Definitions on page 32 for list of properties included in Medical Office Portfolio)

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 Securities and Exchange Commission, including our 2012 Form 10-K filed on February 27, 2013 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.




Supplemental Financial and Operating Data

Table of Contents
December 31, 2013
Schedule
Page
Key Financial Data
 
 
Consolidated Statements of Operations
 
Discontinued Operations
 
Consolidated Balance Sheets
 
Funds From Operations
 
Funds Available for Distribution
 
Adjusted Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
Capital Analysis
 
 
Long-Term Debt Analysis
 
Long-Term Debt Maturities
 
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
Growth and Strategy
 
 
Acquisition and Disposition Summary
 
Development/Redevelopment Summary
Tenant Analysis
 
 
Commercial Leasing Summary- New Leases
 
Commercial Leasing Summary- Renewal Leases
 
10 Largest Tenants - Based on Annualized Rent
 
Industry Diversification
 
Lease Expirations
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
12/31/2013
 
12/31/2012
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Real estate rental revenue
$
263,024

 
$
254,794

 
$
66,721

 
$
65,828

 
$
65,915

 
$
64,560

 
$
64,660

Real estate expenses
(93,293
)
 
(86,545
)
 
(23,826
)
 
(23,243
)
 
(23,670
)
 
(22,554
)
 
(21,725
)
 
169,731

 
168,249

 
42,895

 
42,585

 
42,245

 
42,006

 
42,935

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
(85,740
)
 
(85,107
)
 
(22,412
)
 
(21,168
)
 
(21,037
)
 
(21,123
)
 
(21,514
)
Income from real estate
83,991

 
83,142

 
20,483

 
21,417

 
21,208

 
20,883

 
21,421

 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative expenses
(17,535
)
 
(15,488
)
 
(5,818
)
 
(3,850
)
 
(4,005
)
 
(3,862
)
 
(4,545
)
Acquisition costs
(1,265
)
 
(234
)
 
(817
)
 
(148
)
 
(87
)
 
(213
)
 
(90
)
Interest expense
(63,573
)
 
(60,627
)
 
(15,629
)
 
(15,930
)
 
(15,824
)
 
(16,190
)
 
(16,644
)
Other income
926

 
975

 
221

 
220

 
246

 
239

 
242

Loss on extinguishment of debt
(2,737
)
 
—

 
(2,737
)
 
—

 
—

 
—

 
—

Income (loss) from continuing operations
(193
)
 
7,768

 
(4,297
)
 
1,709

 
1,538

 
857

 
384

Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Income from operations of properties sold or held for sale
15,395

 
10,816

 
4,256

 
4,131

 
3,725

 
3,283

 
1,174

  Gain on sale of real estate
22,144

 
5,124

 
18,949

 
—

 
—

 
3,195

 
1,400

Income from discontinued operations
37,539

 
15,940

 
23,205

 
4,131

 
3,725

 
6,478

 
2,574

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
37,346

 
23,708

 
18,908

 
5,840

 
5,263

 
7,335

 
2,958

Less: Net income from noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

Net income attributable to the controlling interests
$
37,346

 
$
23,708

 
$
18,908

 
$
5,840

 
$
5,263

 
$
7,335

 
$
2,958

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to the controlling interests
$
0.55

 
$
0.35

 
$
0.28

 
$
0.09

 
$
0.08

 
$
0.11

 
$
0.04

Fully diluted weighted average shares outstanding
66,580

 
66,376

 
66,591

 
66,561

 
66,556

 
66,519

 
66,416

Percentage of Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
35.5
 %
 
34.0
%
 
35.7
 %
 
35.3
%
 
35.9
%
 
34.9
%
 
33.6
%
General and administrative expenses
6.7
 %
 
6.1
%
 
8.7
 %
 
5.8
%
 
6.1
%
 
6.0
%
 
7.0
%
Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA / Interest expense
2.8
x
 
2.9
x
 
2.6
x
 
2.9
x
 
2.9
x
 
2.8
x
 
2.7
x
Income (loss) from continuing operations/Total real estate revenue
(0.1
)%
 
3.0
%
 
(6.4
)%
 
2.6
%
 
2.3
%
 
1.3
%
 
0.6
%
Net income attributable to the controlling interest/Total real estate revenue
14.2
 %
 
9.3
%
 
28.3
 %
 
8.9
%
 
8.0
%
 
11.4
%
 
4.6
%
Note: Certain prior period amounts have been reclassified to conform to the current period presentation.
 
 

4


Medical Office Portfolio
(In thousands)
(Unaudited)

 
Twelve Months Ended
 
Three Months Ended
Income from Medical Office Portfolio (1):
12/31/2013

 
12/31/2012

 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Real estate rental revenue
$
45,445

 
$
50,188

 
$
8,651

 
$
12,073

 
$
12,357

 
$
12,364

 
$
12,411

Real estate expenses
(16,878
)
 
(16,731
)
 
(4,184
)
 
(4,398
)
 
(3,759
)
 
(4,537
)
 
(4,066
)
 
28,567

 
33,457

 
4,467

 
7,675

 
8,598

 
7,827

 
8,345

Real estate depreciation and amortization
(12,161
)
 
(17,959
)
 
—

 
(3,215
)
 
(4,545
)
 
(4,401
)
 
(4,617
)
Interest expense
(1,196
)
 
(4,070
)
 
(211
)
 
(329
)
 
(328
)
 
(328
)
 
(767
)
Real estate impairment
—

 
(2,097
)
 
—

 
—

 
—

 
—

 
(2,097
)
Income from operations of Medical Office Portfolio (1)
15,210

 
9,331

 
4,256

 
4,131

 
3,725

 
3,098

 
864

Income from operations of non medical office portfolio sold properties (2)
185

 
1,485

 
—

 
—

 
—

 
185

 
310

Gain on sale of real estate
22,144

 
5,124

 
18,949

 
—

 
—

 
3,195

 
1,400

Income from discontinued operations
$
37,539

 
$
15,940

 
$
23,205

 
$
4,131

 
$
3,725

 
$
6,478

 
$
2,574

 
 
 
As of
Investment in Medical Office Portfolio (1):
 
 
 
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Office
 
 
 
 
$
—

 
$
55,049

 
$
54,902

 
$
54,794

 
$
54,155

Medical Office
 
 
 
 
125,967

 
409,486

 
409,040

 
408,107

 
406,873

Total
 
 
 
 
125,967

 
464,535

 
463,942

 
462,901

 
461,028

Less accumulated depreciation
 
 
 
 
(46,066
)
 
(118,378
)
 
(115,796
)
 
(111,601
)
 
(107,557
)
Investment in Medical Office Portfolio (1)
 
 
 
 
79,901

 
346,157

 
348,146

 
351,300

 
353,471

Investment in non medical office portfolio sold properties (2)
 
 
 
 
—

 
—

 
—

 
—

 
11,528

Investment in real estate sold or held for sale, net
 
 
 
 
$
79,901

 
$
346,157

 
$
348,146

 
$
351,300

 
$
364,999

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage notes payable secured by Medical Office Portfolio (1)
 
 
 
 
$
—

 
$
23,467

 
$
23,627

 
$
23,785

 
$
23,945

(1) Medical Office Portfolio:
Office - Woodholme Center and 6565 Arlington Boulevard
Medical Office - 2440 M Street, 15001 Shady Grove Road, 15505 Shady Grove Road, 19500 at Riverside Park )formerly Lansdowne Medical Office Building), 9707 Medical Center Drive, CentreMed I and II, 8301 Arlington Boulevard, Sterling Medical Office Building, Shady Grove Medical Village II, Alexandria Professional Center, Ashburn Farm Office Park I, II and III, Woodholme Medical Office Building, Woodburn Medical Park I and II, and Prosperity Medical Center I, II and III
 
WRIT entered into four separate contracts with a single buyer to sell all of the held for sale properties (collectively, the "Medical Office Portfolio") for a combined sales price of $500.8 million. The first two separate sale transactions of its medical office portfolio closed on November 21 and November 22, 2013 for an aggregate sales price of $307.2 million. The second two sales transactions closed on January 21, 2014 for an aggregate sales price of $193.6 million.
 
(2) Non Medical Office Portfolio Sold properties:
Office - 1700 Research Boulevard (sold on August 31, 2012) and the Atrium Building (sold on March 19, 2013)
Medical Office - Plumtree Medical Center (sold on December 20, 2012)

5



Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Assets
 
 
 
 
 
 
 
 
 
Land
$
426,575

 
$
418,008

 
$
418,008

 
$
418,008

 
$
418,008

Income producing property
1,675,652

 
1,624,617

 
1,608,939

 
1,595,083

 
1,587,375

 
2,102,227

 
2,042,625

 
2,026,947

 
2,013,091

 
2,005,383

Accumulated depreciation and amortization
(565,342
)
 
(548,549
)
 
(531,197
)
 
(514,173
)
 
(497,057
)
Net income producing property
1,536,885

 
1,494,076

 
1,495,750

 
1,498,918

 
1,508,326

Development in progress, including land held for development
61,315

 
55,580

 
51,397

 
49,041

 
45,270

Total real estate held for investment, net
1,598,200

 
1,549,656

 
1,547,147

 
1,547,959

 
1,553,596

Investment in real estate held for sale, net
79,901

 
346,157

 
348,146

 
351,300

 
364,999

Cash and cash equivalents
130,343

 
7,923

 
5,919

 
16,743

 
19,105

Restricted cash
9,189

 
7,547

 
10,254

 
9,560

 
13,423

Rents and other receivables, net of allowance for doubtful accounts
48,756

 
48,619

 
49,436

 
48,988

 
46,904

Prepaid expenses and other assets
105,004

 
110,116

 
101,829

 
102,773

 
107,303

Other assets related to properties sold or held for sale
4,100

 
18,337

 
18,011

 
18,797

 
19,046

Total assets
$
1,975,493

 
$
2,088,355

 
$
2,080,742

 
$
2,096,120

 
$
2,124,376

Liabilities
 
 
 
 
 
 
 
 
 
Notes payable
$
846,703

 
$
846,576

 
$
846,450

 
$
846,323

 
$
906,190

Mortgage notes payable
294,671

 
290,838

 
288,584

 
288,611

 
319,025

Lines of credit/short-term note payable
—

 
85,000

 
75,000

 
70,000

 
—

Accounts payable and other liabilities
51,742

 
57,116

 
48,836

 
53,472

 
50,094

Advance rents
13,529

 
11,749

 
12,382

 
12,653

 
12,925

Tenant security deposits
7,869

 
7,639

 
7,559

 
7,539

 
7,642

Other liabilities related to properties sold or held for sale
1,533

 
31,275

 
30,703

 
32,696

 
32,357

Total liabilities
1,216,047

 
1,330,193

 
1,309,514

 
1,311,294

 
1,328,233

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

 
665

 
665

 
664

Additional paid-in capital
1,151,174

 
1,148,837

 
1,147,710

 
1,146,683

 
1,145,515

Distributions in excess of net income
(396,880
)
 
(395,816
)
 
(381,623
)
 
(366,821
)
 
(354,122
)
Total shareholders' equity
754,959

 
753,686

 
766,752

 
780,527

 
792,057

Noncontrolling interests in subsidiaries
4,487

 
4,476

 
4,476

 
4,299

 
4,086

Total equity
759,446

 
758,162

 
771,228

 
784,826

 
796,143

Total liabilities and equity
$
1,975,493

 
$
2,088,355

 
$
2,080,742

 
$
2,096,120

 
$
2,124,376

Total Debt / Total Market Capitalization
0.42
:1
 
0.43
:1
 
0.41
:1
 
0.40
:1
 
0.42
:1

6



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

 
Twelve Months Ended
 
Three Months Ended
 
12/31/2013
 
12/31/2012
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Funds from operations (FFO)(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to the controlling interests
$
37,346

 
$
23,708

 
$
18,908

 
$
5,840

 
$
5,263

 
$
7,335

 
$
2,958

Real estate depreciation and amortization
85,740

 
85,107

 
22,412

 
21,168

 
21,037

 
21,123

 
21,514

Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of real estate
(22,144
)
 
(5,124
)
 
(18,949
)
 
—

 
—

 
(3,195
)
 
(1,400
)
Real estate depreciation and amortization
12,161

 
18,827

 
—

 
3,215

 
4,545

 
4,401

 
4,617

FFO
$
113,103

 
$
122,518

 
$
22,371

 
$
30,223

 
$
30,845

 
$
29,664

 
$
27,689

Loss on extinguishment of debt
2,737

 
—

 
2,737

 
—

 
—

 
—

 
—

Real estate impairment
92

 
2,097

 
92

 
—

 
—

 
—

 
2,097

Severance expense
2,490

 
1,583

 
2,157

 
250

 
266

 
(183
)
 
1,583

Acquisition costs
1,265

 
234

 
817

 
148

 
87

 
213

 
90

Core FFO (1)
$
119,687

 
$
126,432

 
$
28,174

 
$
30,621

 
$
31,198

 
$
29,694

 
$
31,459

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
$
(415
)
 
$
(582
)
 
$
(44
)
 
$
(109
)
 
$
(142
)
 
$
(120
)
 
$
(93
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share - basic
$
1.69

 
$
1.84

 
$
0.34

 
$
0.45

 
$
0.46

 
$
0.44

 
$
0.42

FFO per share - fully diluted
$
1.69

 
$
1.84

 
$
0.34

 
$
0.45

 
$
0.46

 
$
0.44

 
$
0.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core FFO per share - fully diluted
$
1.79

 
$
1.90

 
$
0.42

 
$
0.46

 
$
0.47

 
$
0.44

 
$
0.47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common dividend per share
$
1.2000

 
$
1.4675

 
$
0.3000

 
$
0.3000

 
$
0.3000

 
$
0.3000

 
$
0.3000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shares - basic
66,580

 
66,239

 
66,591

 
66,410

 
66,405

 
66,393

 
66,273

Average shares - fully diluted
66,609

 
66,376

 
66,634

 
66,561

 
66,556

 
66,519

 
66,416

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  See "Supplemental Definitions" on page 31 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.
 
 
 
 


7



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


 
Twelve Months Ended
 
Three Months Ended
 
12/31/2013
 
12/31/2012
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Funds available for distribution (FAD)(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO
$
113,103

 
$
122,518

 
$
22,371

 
$
30,223

 
$
30,845

 
$
29,664

 
$
27,689

Non-cash loss (gain) on extinguishment of debt
88

 
—

 
88

 
—

 
—

 
—

 
—

Tenant improvements
(21,567
)
 
(16,540
)
 
(7,717
)
 
(3,957
)
 
(5,918
)
 
(3,975
)
 
(4,901
)
Leasing commissions and incentives
(14,777
)
 
(9,157
)
 
(6,083
)
 
(3,746
)
 
(2,342
)
 
(2,606
)
 
(2,334
)
Recurring capital improvements
(6,902
)
 
(7,307
)
 
(1,953
)
 
(1,917
)
 
(2,311
)
 
(721
)
 
(1,414
)
Straight-line rent, net
(1,757
)
 
(3,265
)
 
(353
)
 
(578
)
 
(483
)
 
(343
)
 
(738
)
Non-cash fair value interest expense
1,020

 
926

 
256

 
255

 
255

 
254

 
253

Non-real estate depreciation and amortization
3,736

 
3,854

 
906

 
939

 
933

 
958

 
911

Amortization of lease intangibles, net
475

 
6

 
219

 
129

 
86

 
41

 
41

Amortization and expensing of restricted share and unit compensation
6,211

 
5,786

 
2,623

 
1,215

 
1,355

 
1,018

 
1,842

Real estate impairment
92

 
2,097

 
92

 
—

 
—

 
—

 
2,097

FAD
$
79,722

 
$
98,918

 
$
10,449

 
$
22,563

 
$
22,420

 
$
24,290

 
$
23,446

Cash loss on extinguishment of debt
2,649

 
—

 
2,649

 
—

 
—

 
—

 
—

Non-share-based severance expense
1,537

 
850

 
1,537

 
—

 
—

 
—

 
850

Acquisition costs
1,265

 
234

 
817

 
148

 
87

 
213

 
90

Core FAD (1)
$
85,173

 
$
100,002

 
$
15,452

 
$
22,711

 
$
22,507

 
$
24,503

 
$
24,386

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
$
(415
)
 
$
(582
)
 
$
(44
)
 
$
(109
)
 
$
(142
)
 
$
(120
)
 
$
(93
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FAD per share - basic
$
1.19

 
$
1.48

 
$
0.16

 
$
0.34

 
$
0.34

 
$
0.36

 
$
0.35

FAD per share - fully diluted
$
1.19

 
$
1.48

 
$
0.16

 
$
0.34

 
$
0.33

 
$
0.36

 
$
0.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core FAD per share - fully diluted
$
1.27

 
$
1.50

 
$
0.23

 
$
0.34

 
$
0.34

 
$
0.37

 
$
0.37

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common dividend per share
$
1.2000

 
$
1.4675

 
$
0.3000

 
$
0.3000

 
$
0.3000

 
$
0.3000

 
$
0.3000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shares - basic
66,580

 
66,239

 
66,591

 
66,410

 
66,405

 
66,393

 
66,273

Average shares - fully diluted
66,609

 
66,376

 
66,634

 
66,561

 
66,556

 
66,519

 
66,416

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  See "Supplemental Definitions" on page 31 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.
 
 
 
 


8



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

 
Twelve Months Ended
 
Three Months Ended
 
12/31/2013
 
12/31/2012
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Adjusted EBITDA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to the controlling interests
$
37,346

 
$
23,708

 
$
18,908

 
$
5,840

 
$
5,263

 
$
7,335

 
$
2,958

Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, including discontinued operations
64,769

 
64,958

 
15,840

 
16,259

 
16,152

 
16,518

 
17,481

Real estate depreciation and amortization, including discontinued operations
97,901

 
103,934

 
22,412

 
24,383

 
25,582

 
25,524

 
26,131

Income tax expense
5

 
245

 
(25
)
 
6

 
24

 
—

 
57

Real estate impairment
92

 
2,097

 
92

 
—

 
—

 
—

 
2,097

Non-real estate depreciation
810

 
914

 
196

 
203

 
215

 
196

 
131

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
    Gain on sale of real estate
(22,144
)
 
(5,124
)
 
(18,949
)
 
—

 
—

 
(3,195
)
 
(1,400
)
    Loss on extinguishment of debt
2,737

 
—

 
2,737

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
$
181,516

 
$
190,732

 
$
41,211

 
$
46,691

 
$
47,236

 
$
46,378

 
$
47,455

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Adjusted EBITDA is earnings before interest expense, taxes, depreciation, amortization, gain on sale of real estate, real estate impairment, 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.


9



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

 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Balances Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Conventional fixed rate (1)
$
294,671

 
$
314,305

 
$
312,211

 
$
312,396

 
$
342,970

Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds and notes (2)
846,703

 
846,576

 
846,450

 
846,323

 
906,190

Credit facility
—

 
85,000

 
75,000

 
70,000

 
—

Unsecured total
846,703

 
931,576

 
921,450

 
916,323

 
906,190

Total
$
1,141,374

 
$
1,245,881

 
$
1,233,661

 
$
1,228,719

 
$
1,249,160

 
 
 
 
 
 
 
 
 
 
Average Interest Rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Conventional fixed rate (1)
6.1
%
 
6.1
%
 
6.1
%
 
6.1
%
 
6.1
%
Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds (2)
4.9
%
 
4.9
%
 
4.9
%
 
4.9
%
 
4.9
%
Credit facilities
—
%
 
1.4
%
 
1.4
%
 
1.4
%
 
—
%
Unsecured total
4.9
%
 
4.6
%
 
4.6
%
 
4.7
%
 
4.9
%
Average
5.2
%
 
5.0
%
 
5.0
%
 
5.0
%
 
5.3
%

Note: The current balances outstanding of the secured and unsecured fixed rate bonds and notes are shown net of discounts/premiums of $2.5 million and $3.3 million, respectively.
 
(1) The secured balances outstanding include the mortgage notes payable which have been reclassified to 'Liabilities related to properties sold or held for sale' on the consolidated balance sheet, the mortgage notes payable are secured by Woodholme Medical Center, Ashburn Farm Office Park I, Ashburn Farm Office Park III totaling $23.5 million (repaid on November 22, 2013 and November 21, 2013). See Medical Office Portfolio Supplemental page 5 for detail by quarter. In addition, the secured balance as of December 31, 2012 includes mortgage notes which have since been repaid, without penalty, for West Gude Drive (repaid on January 11, 2013).

(2) Subsequent to quarter end, WRIT repaid its $100.0 million of 5.25% unsecured notes on their maturity date of January 15, 2014.





    

10



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
2014
$
—

 
$
100,000

(1) 
$
—

 
$
100,000

 
5.3%
2015
—

 
150,000

 
—

 
150,000

 
5.4%
2016
139,062

 
—

 
—

 
139,062

 
5.6%
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
—

 
—

 
—

 
—

 
—%
2024
—

 
—

 
—

 
—

 
—%
Thereafter
—

 
50,000

 
—

 
50,000

 
7.4%
Scheduled principal payments
$
272,208

 
$
850,000

 
$
—

 
$
1,122,208

 
5.2%
Scheduled amortization payments
24,992

 
—

 
—

 
24,992

 
5.1%
Net discounts/premiums
(2,529
)
 
(3,297
)
 
—

 
(5,826
)
 
—%
Total maturities
$
294,671

 
$
846,703

 
$
—

 
$
1,141,374

 
5.2%
Weighted average maturity = 5.5 years
(1) Subsequent to quarter end, WRIT repaid its $100.0 million of 5.25% unsecured notes on their maturity date of January 15, 2014.

11



Debt Covenant Compliance
 

 
Unsecured Notes Payable
 
Unsecured Line of Credit #1
($100.0 million)
 
Unsecured Line of Credit #2
($400.0 million)
 
Quarter Ended December 31, 2013
 
Covenant
 
Quarter Ended December 31, 2013
 
Covenant
 
Quarter Ended December 31, 2013
 
Covenant
% of Total Indebtedness to Total Assets(1)
41.8
%
 
≤ 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)
10.8
%
 
≤ 40.0%
 
 N/A

 
N/A
 
 N/A

 
N/A
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness
2.6

 
≥ 1.5
 
 N/A

 
N/A
 
 N/A

 
N/A
Tangible Net Worth(3)
 N/A

 
N/A
 
$814.0 million

 
≥ $673.4 million
 
$815.3 million

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

 
N/A
 
50.4
%
 
≤ 60.0%
 
50.4
%
 
≤ 60.0%
% of Secured Indebtedness to Gross Asset Value(5)
 N/A

 
N/A
 
11.5
%
 
≤ 35.0%
 
11.5
%
 
≤ 35.0%
Ratio of EBITDA(4) to Fixed Charges(6)
 N/A

 
N/A
 
2.56

 
≥ 1.50
 
2.56

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

 
N/A
 
2.28

 
≥ 1.67
 
2.28

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

 
N/A
 
3.17

 
≥ 2.00
 
3.17

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

 
N/A
 
4.6
%
 
≤ 15.0%
 
4.6
%
 
≤ 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 redevelopment and development costs upon commencement of construction, if any.

12


        

Capital Analysis
(In thousands, except per share amounts)
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Market Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares Outstanding
66,531

 
66,500

 
66,500

 
66,485

 
66,437

Market Price per Share
$
23.36

 
$
25.27

 
$
26.91

 
$
27.84

 
$
26.15

Equity Market Capitalization
$
1,554,164

 
$
1,680,455

 
$
1,789,515

 
$
1,850,942

 
$
1,737,328

 
 
 
 
 
 
 
 
 
 
Total Debt
$
1,141,374

 
$
1,245,881

 
$
1,233,661

 
$
1,228,719

 
$
1,249,160

Total Market Capitalization
$
2,695,538

 
$
2,926,336

 
$
3,023,176

 
$
3,079,661

 
$
2,986,488

 
 
 
 
 
 
 
 
 
 
Total Debt to Market Capitalization
0.42
:1
 
0.43
:1
 
0.41
:1
 
0.40
:1
 
0.42
:1
 
 
 
 
 
 
 
 
 
 
Earnings to Fixed Charges(1)
0.7x

 
1.1x

 
1.1x

 
1.0x

 
1.0x

Debt Service Coverage Ratio(2)
2.5x

 
2.7x

 
2.8x

 
2.7x

 
2.6x

 
 
 
 
 
 
 
 
 
 
Dividend Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Dividends Paid
$
19,972

 
$
20,033

 
$
20,065

 
$
20,034

 
$
19,928

Common Dividend per Share
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

Payout Ratio (Core FFO per share basis)
71.4
%
 
65.2
%
 
63.8
%
 
68.2
%
 
63.8
%
Payout Ratio (Core FAD per share basis)
130.4
%
 
88.2
%
 
88.2
%
 
81.1
%
 
81.1
%
Payout Ratio (FAD per share basis)
187.5
%
 
88.2
%
 
90.9
%
 
83.3
%
 
85.7
%
 
 
 
 
 
 
 
 
 
 
(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 9) by interest expense and principal amortization.





13



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

 
 
Three Months Ended December 31, (1)
 
Twelve Months Ended December 31, (2)
 
 
2013
 
2012
 
% Change
 
Rental Rate Growth
 
2013
 
2012
 
% Change
 
Rental Rate Growth
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
$
7,733

 
$
8,181

 
(5.5
)%
 
1.2
%
 
$
31,247

 
$
31,664

 
(1.3
)%
 
2.9
%
Office
 
21,902

 
21,769

 
0.6
 %
 
2.3
%
 
82,938

 
82,389

 
0.7
 %
 
2.4
%
Retail
 
10,613

 
10,217

 
3.9
 %
 
3.5
%
 
42,296

 
41,055

 
3.0
 %
 
4.0
%
Overall Same-Store Portfolio
 
$
40,248

 
$
40,167

 
0.2
 %
 
2.3
%
 
$
156,481

 
$
155,108

 
0.9
 %
 
2.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
$
7,854

 
$
8,364

 
(6.1
)%
 
1.2
%
 
$
31,788

 
$
32,420

 
(1.9
)%
 
2.9
%
Office
 
22,119

 
22,166

 
(0.2
)%
 
2.2
%
 
83,468

 
83,534

 
(0.1
)%
 
1.9
%
Retail
 
10,671

 
10,273

 
3.9
 %
 
3.6
%
 
42,421

 
41,804

 
1.5
 %
 
3.5
%
Overall Same-Store Portfolio
 
$
40,644

 
$
40,803

 
(0.4
)%
 
2.2
%
 
$
157,677

 
$
157,758

 
(0.1
)%
 
2.5
%
(1) Non same-store properties were:
Acquisitions:
Multifamily - The Paramount
Redevelopment:
Office - 7900 Westpark Drive    
Held for sale and sold properties:
Office -1700 Research Blvd and The Atrium Building.
Medical Office/Office - Plumtree Medical Center and the Medical Office Portfolio (see Supplemental Definitions on page 32 for list of properties included in the Medical Office Portfolio)
  
(2) Non same-store properties were:
Acquisitions:
Office - Fairgate at Ballston.
Multifamily - The Paramount
Redevelopment:
     Office - 7900 Westpark Drive
Held for sale and sold properties:
Office -1700 Research Blvd and The Atrium Building.
Medical Office/Office - Plumtree Medical Center and the Medical Office Portfolio (see Supplemental Definitions on page 32 for list of properties included in the Medical Office Portfolio)


14



Same-Store Portfolio Net Operating Income (NOI) Detail
(In thousands)
 
Three Months Ended December 31, 2013
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
13,240

 
$
35,470

 
$
—

 
$
14,084

 
$
—

 
$
62,794

Non same-store - acquired and in development(1)
907

 
3,020

 
—

 
—

 
—

 
3,927

                         Total
14,147

 
38,490

 
—

 
14,084

 
—

 
66,721

 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
5,386

 
13,351

 
—

 
3,413

 
—

 
22,150

Non same-store - acquired and in development(1)
431

 
1,245

 
—

 
—

 
—

 
1,676

                         Total
5,817

 
14,596

 
—

 
3,413

 
—

 
23,826

 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
7,854

 
22,119

 
—

 
10,671

 
—

 
40,644

Non same-store - acquired and in development(1)
476

 
1,775

 
—

 
—

 
—

 
2,251

                          Total
$
8,330

 
$
23,894

 
$
—

 
$
10,671

 
$
—

 
$
42,895

 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
7,854

 
$
22,119

 
$
—

 
$
10,671

 
$
—

 
$
40,644

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

 
(455
)
 
—

 
(67
)
 
—

 
(522
)
FAS 141 Min Rent
(121
)
 
67

 
—

 
(56
)
 
—

 
(110
)
Amortization of lease intangibles for same-store properties
—

 
171

 
—

 
65

 
—

 
236

Same-store portfolio NOI, cash basis
$
7,733

 
$
21,902

 
$
—

 
$
10,613

 
$
—

 
$
40,248

Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
8,330

 
$
23,894

 
$
—

 
$
10,671

 
$
—

 
$
42,895

Depreciation and amortization
(3,700
)
 
(14,961
)
 
—

 
(3,440
)
 
(311
)
 
(22,412
)
General and administrative expenses
—

 
—

 
—

 
—

 
(5,818
)
 
(5,818
)
Acquisition costs
—

 
—

 
—

 
—

 
(817
)
 
(817
)
Interest expense
(1,912
)
 
(2,579
)
 
—

 
(261
)
 
(10,877
)
 
(15,629
)
Other income
—

 
—

 
—

 
—

 
221

 
221

Loss on extinguishment of debt
—

 
—

 
—

 
—

 
(2,737
)
 
(2,737
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale (1)
—

 
292

 
3,964

 
—

 
—

 
4,256

Gain on sale of real estate
—

 
—

 
—

 
—

 
18,949

 
18,949

Net Income
2,718

 
6,646

 
3,964

 
6,970

 
(1,390
)
 
18,908

Net income attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

Net income attributable to the controlling interests
$
2,718

 
$
6,646

 
$
3,964

 
$
6,970

 
$
(1,390
)
 
$
18,908

(1)  For a list of non-same-store properties and held for sale and sold properties, see page 14 of this Supplemental.


15



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
Three Months Ended December 31, 2012
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
13,403

 
$
34,424

 
$
—

 
$
13,488

 
$
—

 
$
61,315

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

 
3,345

 
—

 
—

 
—

 
3,345

                         Total
13,403

 
37,769

 
—

 
13,488

 
—

 
64,660

Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
5,039

 
12,258

 
—

 
3,215

 
—

 
20,512

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

 
1,213

 
—

 
—

 
—

 
1,213

                         Total
5,039

 
13,471

 
—

 
3,215

 
—

 
21,725

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
8,364

 
22,166

 
—

 
10,273

 
—

 
40,803

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

 
2,132

 
—

 
—

 
—

 
2,132

                          Total
$
8,364

 
$
24,298

 
$
—

 
$
10,273

 
$
—

 
$
42,935

 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
8,364

 
$
22,166

 
$
—

 
$
10,273

 
$
—

 
$
40,803

Straight-line revenue, net for same-store properties
1

 
(650
)
 
—

 
(16
)
 
—

 
(665
)
FAS 141 Min Rent
(184
)
 
126

 
—

 
(96
)
 
—

 
(154
)
Amortization of lease intangibles for same-store properties
—

 
127

 
—

 
56

 
—

 
183

Same-store portfolio NOI, cash basis
$
8,181

 
$
21,769

 
$
—

 
$
10,217

 
$
—

 
$
40,167

Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
8,364

 
$
24,298

 
$
—

 
$
10,273

 
$
—

 
$
42,935

Depreciation and amortization
(3,027
)
 
(14,757
)
 
—

 
(3,443
)
 
(287
)
 
(21,514
)
General and administrative expense
—

 
—

 
—

 
—

 
(4,545
)
 
(4,545
)
Acquisition costs
—

 
—

 
—

 
—

 
(90
)
 
(90
)
Interest expense
(1,709
)
 
(3,045
)
 
—

 
(279
)
 
(11,611
)
 
(16,644
)
Other income
—

 
—

 
—

 
—

 
242

 
242

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

 
421

 
753

 
—

 
—

 
1,174

Gain on sale of real estate
—

 
—

 
—

 
—

 
1,400

 
1,400

Net income
3,628

 
6,917

 
753

 
6,551

 
(14,891
)
 
2,958

Net income attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

Net income attributable to the controlling interests
$
3,628

 
$
6,917

 
$
753

 
$
6,551

 
$
(14,891
)
 
$
2,958

(1)  For a list of non-same-store properties and held for sale and sold properties, see page 14 of this Supplemental.
 
 

16



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
Twelve Months Ended December 31, 2013
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
53,589

 
$
133,855

 
$
—

 
$
56,189

 
$
—

 
$
243,633

Non same-store - acquired and in development 1
907

 
18,484

 
—

 
—

 
—

 
19,391

                         Total
54,496

 
152,339

 
—

 
56,189

 
—

 
263,024

Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
21,801

 
50,387

 
—

 
13,768

 
—

 
85,956

Non same-store - acquired and in development 1
431

 
6,906

 
—

 
—

 
—

 
7,337

                         Total
22,232

 
57,293

 
—

 
13,768

 
—

 
93,293

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
31,788

 
83,468

 
—

 
42,421

 
—

 
157,677

Non same-store - acquired and in development 1
476

 
11,578

 
—

 
—

 
—

 
12,054

                          Total
$
32,264

 
$
95,046

 
$
—

 
$
42,421

 
$
—

 
$
169,731

 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
31,788

 
$
83,468

 
$
—

 
$
42,421

 
$
—

 
$
157,677

Straight-line revenue, net for same-store properties
6

 
(1,307
)
 
—

 
(73
)
 
—

 
(1,374
)
FAS 141 Min Rent
(547
)
 
210

 
—

 
(297
)
 
—

 
(634
)
Amortization of lease intangibles for same-store properties
—

 
567

 
—

 
245

 
—

 
812

Same-store portfolio NOI, cash basis
$
31,247

 
$
82,938

 
$
—

 
$
42,296

 
$
—

 
$
156,481

 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
32,264

 
$
95,046

 
$
—

 
$
42,421

 
$
—

 
$
169,731

Depreciation and amortization
(12,691
)
 
(58,183
)
 
—

 
(13,730
)
 
(1,136
)
 
(85,740
)
General and administrative expenses
—

 
—

 
—

 
—

 
(17,535
)
 
(17,535
)
Acquisition costs
—

 
—

 
—

 
—

 
(1,265
)
 
(1,265
)
Interest expense
(6,973
)
 
(10,332
)
 
—

 
(1,072
)
 
(45,196
)
 
(63,573
)
Other income
—

 
—

 
—

 
—

 
926

 
926

Loss on extinguishment of debt
—

 
—

 
—

 
—

 
(2,737
)
 
(2,737
)
Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale (1)
—

 
1,351

 
14,044

 
—

 
—

 
15,395

Gain on sale of real estate
—

 
—

 
—

 
—

 
22,144

 
22,144

Net Income
12,600

 
27,882

 
14,044

 
27,619

 
(44,799
)
 
37,346

Net income attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

Net income attributable to the controlling interests
$
12,600

 
$
27,882

 
$
14,044

 
$
27,619

 
$
(44,799
)
 
$
37,346

(1)  For a list of non-same-store properties and held for sale and sold properties, see page 14 of this Supplemental.

17



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
Twelve Months Ended December 31, 2012
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
52,887

 
$
131,025

 
$
—

 
$
54,506

 
$
—

 
$
238,418

Non same-store - acquired and in development 1
—

 
16,376

 
—

 
—

 
—

 
16,376

                         Total
52,887

 
147,401

 
—

 
54,506

 
—

 
254,794

Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
20,467

 
47,491

 
—

 
12,702

 
—

 
80,660

Non same-store - acquired and in development 1
—

 
5,885

 
—

 
—

 
—

 
5,885

                         Total
20,467

 
53,376

 
—

 
12,702

 
—

 
86,545

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
32,420

 
83,534

 
—

 
41,804

 
—

 
157,758

Non same-store - acquired and in development 1
—

 
10,491

 
—

 
—

 
—

 
10,491

                          Total
$
32,420

 
$
94,025

 
$
—

 
$
41,804

 
$
—

 
$
168,249

 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
32,420

 
$
83,534

 
$
—

 
$
41,804

 
$
—

 
$
157,758

Straight-line revenue, net for same-store properties
(4
)
 
(2,011
)
 
—

 
(598
)
 
—

 
(2,613
)
FAS 141 Min Rent
(752
)
 
448

 
—

 
(355
)
 
—

 
(659
)
Amortization of lease intangibles for same-store properties
—

 
418

 
—

 
204

 
—

 
622

Same-store portfolio NOI, cash basis
$
31,664

 
$
82,389

 
$
—

 
$
41,055

 
$
—

 
$
155,108

 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to Net Income
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
32,420

 
$
94,025

 
$
—

 
$
41,804

 
$
—

 
$
168,249

Depreciation and amortization
(12,629
)
 
(57,377
)
 
—

 
(14,038
)
 
(1,063
)
 
(85,107
)
General and administrative expenses
—

 
—

 
—

 
—

 
(15,488
)
 
(15,488
)
Acquisition costs
—

 
—

 
—

 
—

 
(234
)
 
(234
)
Interest expense
(6,812
)
 
(12,189
)
 
—

 
(1,846
)
 
(39,780
)
 
(60,627
)
Other income
—

 
—

 
—

 
—

 
975

 
975

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

 
2,492

 
8,324

 
—

 
—

 
10,816

Gain on sale of real estate
—

 
—

 
—

 
—

 
5,124

 
5,124

Net income
12,979

 
26,951

 
8,324

 
25,920

 
(50,466
)
 
23,708

Net income attributable to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

Net income attributable to the controlling interests
$
12,979

 
$
26,951

 
$
8,324

 
$
25,920

 
$
(50,466
)
 
$
23,708

(1)  For a list of non-same-store properties and held for sale and sold properties, see page 14 of this Supplemental.
 
 

18



Net Operating Income (NOI) by Region
 
 
 
 
 
 
 
 
 
 
 
WRIT Portfolio
 
WRIT Portfolio
Maryland/Virginia/DC
 
Inside & Outside the Beltway
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of
Q4 2013 GAAP NOI
 
Percentage of
YTD 2013 GAAP NOI
 
 
 
Percentage of
Q4 2013 GAAP NOI
 
Percentage of
YTD 2013 GAAP NOI
DC
 
 
 
 
 
Inside the Beltway
 
 
 
 
Multifamily
 
3.9
%
 
4.2
%
 
Multifamily
 
16.9
%
 
17.6
%
Office
 
22.0
%
 
22.3
%
 
Office
 
32.7
%
 
33.0
%
Retail
 
0.9
%
 
0.9
%
 
Retail
 
7.2
%
 
7.3
%
 
 
26.8
%
 
27.4
%
 
 
 
56.8
%
 
57.9
%
 
 
 
 
 
 
 
 
 
 
 
Maryland
 
 
 
 
 
Outside the Beltway
 
 
 
 
Multifamily
 
2.9
%
 
2.9
%
 
Multifamily
 
2.5
%
 
1.4
%
Office
 
11.4
%
 
10.7
%
 
Office
 
23.0
%
 
23.0
%
Retail
 
17.6
%
 
17.7
%
 
Retail
 
17.7
%
 
17.7
%
 
 
31.9
%
 
31.3
%
 
 
 
43.2
%
 
42.1
%
 
 
 
 
 
 
 
 
 
 
 
Virginia
 
 
 
 
 
Total Portfolio
 
100.0
%
 
100.0
%
Multifamily
 
12.6
%
 
12.0
%
 
 
 
 
 
 
Office
 
22.4
%
 
22.9
%
 
 
 
 
 
 
Retail
 
6.3
%
 
6.4
%
 
 
 
 
 
 
 
 
41.3
%
 
41.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Portfolio
 
100.0
%
 
100.0
%
 
 
 
 
 
 

19



Same-Store and Overall Physical Occupancy Levels by Sector


 
 
Physical Occupancy - Same-Store Properties (1)
Sector
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
92.6
%
 
94.1
%
 
93.1
%
 
93.8
%
 
94.1
%
Office
 
86.6
%
 
86.6
%
 
86.4
%
 
85.5
%
 
85.2
%
Retail
 
91.3
%
 
91.4
%
 
93.2
%
 
92.4
%
 
91.2
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
89.4
%
 
89.8
%
 
90.0
%
 
89.5
%
 
89.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Physical Occupancy - All Properties
Sector
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
92.1
%
 
94.1
%
 
93.1
%
 
93.8
%
 
94.1
%
Office
 
85.7
%
 
86.1
%
 
86.3
%
 
85.4
%
 
84.5
%
Medical Office
 
89.0
%
 
84.6
%
 
84.8
%
 
85.2
%
 
85.6
%
Retail
 
91.3
%
 
91.4
%
 
93.2
%
 
92.4
%
 
91.2
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
88.8
%
 
88.7
%
 
89.1
%
 
88.6
%
 
88.1
%

(1) Non same-store properties were:
Acquisitions:
Multifamily - The Paramount
Redevelopment:
Office - 7900 Westpark Drive    
Held for sale and sold properties:
Office - The Atrium Building.
Medical Office/Office - Medical Office Portfolio (see Supplemental Definitions on page 31 for list of properties included in the Medical Office Portfolio).



20



Same-Store Portfolio and Overall Economic Occupancy Levels by Sector
 
 
Economic Occupancy - Same-Store Properties(1)
Sector
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
92.4
%
 
93.5
%
 
92.7
%
 
93.1
%
 
93.5
%
Office
 
87.3
%
 
87.5
%
 
86.7
%
 
86.3
%
 
86.8
%
Retail
 
92.0
%
 
91.5
%
 
92.8
%
 
91.6
%
 
92.9
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
89.4
%
 
89.7
%
 
89.3
%
 
88.9
%
 
89.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Occupancy - All Properties
Sector
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
92.2
%
 
93.5
%
 
92.7
%
 
93.1
%
 
93.5
%
Office
 
86.0
%
 
86.7
%
 
86.5
%
 
85.6
%
 
86.0
%
Medical Office
 
89.4
%
 
87.1
%
 
87.2
%
 
87.6
%
 
88.7
%
Retail
 
92.0
%
 
91.5
%
 
92.8
%
 
91.6
%
 
92.9
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
88.6
%
 
88.7
%
 
88.7
%
 
88.2
%
 
88.8
%


((1) Non same-store properties were:
Acquisitions:
Multifamily - The Paramount
Redevelopment:
Office - 7900 Westpark Drive    
Held for sale and sold properties:
Office - The Atrium Building.
Medical Office/Office - Medical Office Portfolio (see Supplemental Definitions on page 31 for list of properties included in the Medical Office Portfolio).



21


Acquisition and Disposition Summary
December 31, 2013
($'s in thousands)
Acquisition Summary
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition Date
 
# of units
 
12/31/2013 Leased Percentage
 
Investment
 
 
The Paramount
Arlington, VA
October 1, 2013
 
135
 
90%
 
$
48,200

 
 
 
 
 
 
 
 
 
 
 
 
 
Disposition Summary
 
 
 
 
 
 
 
 
 
 
 
 
Disposition Date
 
Property Type
 
Square Feet
 
Contract Sales Price
 
GAAP Gain
The Atrium Building
Rockville, MD
March 19, 2013
 
Office
 
79,000

 
$
15,750

 
$
3,195

Medical Office Portfolio Transaction I & II (1)
various locations
various
 
Medical Office/Office
 
1,093

 
307,189

 
18,949

 
 
 
 
 
 
80,093

 
$
322,939

 
$
22,144


(1) Transaction I & II of the Medical Office Portfolio closed on November 21, 2013, except for Woodholme Medical Office Building, which closed on November 22, 2013.




22


Development/Redevelopment Summary
December 31, 2013
(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
Leased %
Development Summary
 
 
 
 
 
 
650 N. Glebe Road, Arlington, VA
163 units & 2,200 square feet retail
$
49,904

$
25,798

$
7,297

fourth quarter 2014
N/A
 
 
 
 
 
 
 
Redevelopment Summary
 
 
 
 
 
 
7900 Westpark Drive, McLean, VA
530,000 square feet
$
35,000

$
3,290

N/A

first quarter 2015
80%


23



Commercial Leasing Summary - New Leases
 
 
 
4th Quarter 2013
 
3rd Quarter 2013
 
2nd Quarter 2013
 
1st Quarter 2013
 
4th Quarter 2012
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
144,675
 
 
147,194
 
 
94,191
 
 
65,566
 
 
76,252
 
      Medical Office
3,826
 
 
5,804
 
 
3,082
 
 
15,629
 
 
15,083
 
      Retail
22,631
 
 
49,396
 
 
6,240
 
 
46,100
 
 
14,419
 
Total
171,132
 
 
202,394
 
 
103,513
 
 
127,295
 
 
105,754
 
Weighted Average Term (yrs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
7.2
 
 
11.1
 
 
7.8
 
 
8.5
 
 
8.6
 
      Medical Office
10.3
 
 
5.2
 
 
5.4
 
 
7.2
 
 
9.3
 
      Retail
7.8
 
 
9.8
 
 
7.1
 
 
7.3
 
 
8.0
 
Total
7.3
 
 
10.6
 
 
7.6
 
 
7.9
 
 
8.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
$
31.31

 
$
32.29

 
$
32.66

 
$
33.28

 
$
28.28

 
$
29.07

 
$
29.14

 
$
30.36

 
$
30.72

 
$
31.19

      Medical Office
29.56

 
31.13

 
39.59

 
41.07

 
31.53

 
34.17

 
33.53

 
35.53

 
30.85

 
32.40

      Retail
26.23

 
26.91

 
19.86

 
20.06

 
31.31

 
31.71

 
10.26

 
10.26

 
18.49

 
18.59

Total
$
30.42

 
$
31.35

 
$
29.73

 
$
30.28

 
$
28.56

 
$
29.38

 
$
22.84

 
$
23.72

 
$
29.22

 
$
29.79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
$
33.78

 
$
31.31

 
$
33.06

 
$
28.74

 
$
30.34

 
$
27.53

 
$
31.96

 
$
28.86

 
$
35.41

 
$
31.66

      Medical Office
34.78

 
30.43

 
40.01

 
37.73

 
30.97

 
29.12

 
36.67

 
33.94

 
31.30

 
27.69

      Retail
27.74

 
26.04

 
23.45

 
22.02

 
33.54

 
31.98

 
19.12

 
19.04

 
16.74

 
15.35

Total
$
32.78

 
$
30.39

 
$
30.91

 
$
27.36

 
$
30.55

 
$
27.84

 
$
27.89

 
$
25.93

 
$
32.61

 
$
29.22

Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
7.9
%
 
(3.0
)%
 
1.2
%
 
(13.7
)%
 
7.3
 %
 
(5.3
)%
 
9.7
%
 
(4.9
)%
 
15.3
 %
 
1.5
 %
      Medical Office
17.7
%
 
(2.3
)%
 
1.1
%
 
(8.1
)%
 
(1.8
)%
 
(14.8
)%
 
9.4
%
 
(4.5
)%
 
1.5
 %
 
(14.5
)%
      Retail
5.8
%
 
(3.2
)%
 
18.1
%
 
9.8
 %
 
7.1
 %
 
0.8
 %
 
86.3
%
 
85.5
 %
 
(9.5
)%
 
(17.4
)%
Total
7.8
%
 
(3.1
)%
 
4.0
%
 
(9.7
)%
 
7.0
 %
 
(5.3
)%
 
22.1
%
 
9.3
 %
 
11.6
 %
 
(1.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant Improvements
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
Office Buildings
$
6,189,544

 
$
42.78

 
$
8,230,229

 
$
55.91

 
$
3,285,080

 
$
34.88

 
$
2,941,901

 
$
44.87

 
$
3,186,650

 
$
41.79

Medical Office Buildings
63,587

 
16.62

 
101,630

 
17.51

 
67,248

 
21.82

 
513,774

 
32.87

 
652,831

 
43.28

Retail Centers
215,340

 
9.52

 
751,184

 
15.21

 
119,800

 
19.20

 
2,307,500

 
50.05

 
168,500

 
11.69

Subtotal
$
6,468,471

 
$
37.80

 
$
9,083,043

 
$
44.88

 
$
3,472,128

 
$
33.55

 
$
5,763,175

 
$
45.27

 
$
4,007,981

 
$
37.90

Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
4,353,688

 
$
30.09

 
$
6,781,162

 
$
46.07

 
$
2,173,271

 
$
23.08

 
$
2,041,020

 
$
31.13

 
$
1,569,078

 
$
20.58

Medical Office Buildings
91,665

 
23.96

 
99,930

 
17.22

 
42,827

 
13.90

 
223,311

 
14.29

 
327,649

 
21.72

Retail Centers
180,197

 
7.96

 
517,974

 
10.49

 
71,769

 
11.50

 
303,796

 
6.59

 
64,839

 
4.50

Subtotal
$
4,625,550

 
$
27.03

 
$
7,399,066

 
$
36.56

 
$
2,287,867

 
$
22.10

 
$
2,568,127

 
$
20.18

 
$
1,961,566

 
$
18.55

Tenant Improvements and Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
10,543,232

 
$
72.87

 
$
15,011,391

 
$
101.98

 
$
5,458,351

 
$
57.96

 
$
4,982,921

 
$
76.00

 
$
4,755,728

 
$
62.37

Medical Office Buildings
155,252

 
40.58

 
201,560

 
34.73

 
110,075

 
35.72

 
737,085

 
47.16

 
980,480

 
65.00

Retail Centers
395,537

 
17.48

 
1,269,158

 
25.70

 
191,569

 
30.70

 
2,611,296

 
56.64

 
233,339

 
16.19

Total
$
11,094,021

 
$
64.83

 
$
16,482,109

 
$
81.44

 
$
5,759,995

 
$
55.65

 
$
8,331,302

 
$
65.45

 
$
5,969,547

 
$
56.45


24



Commercial Leasing Summary - Renewal Leases

 
4th Quarter 2013
 
3rd Quarter 2013
 
2nd Quarter 2013
 
1st Quarter 2013
 
4th Quarter 2012
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
201,109
 
 
140,894
 
 
92,245
 
 
192,943
 
 
76,772
 
      Medical Office Buildings
12,232
 
 
24,471
 
 
49,383
 
 
21,294
 
 
27,997
 
      Retail Centers
38,995
 
 
112,736
 
 
172,474
 
 
46,124
 
 
59,969
 
Total
252,336
 
 
278,101
 
 
314,102
 
 
260,361
 
 
164,738
 
Weighted Average Term (yrs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
5.8
 
 
6.6
 
 
3.5
 
 
2.7
 
 
3.9
 
      Medical Office Buildings
7.8
 
 
3.0
 
 
10.4
 
 
5.0
 
 
6.2
 
      Retail Centers
4.0
 
 
7.3
 
 
5.3
 
 
4.8
 
 
5.0
 
Total
5.7
 
 
6.5
 
 
5.6
 
 
3.3
 
 
4.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
30.12

 
$
33.00

 
$
38.86

 
$
40.53

 
$
30.72

 
$
32.10

 
$
29.74

 
$
31.56

 
$
29.50

 
$
30.46

            Medical Office Buildings
32.36

 
34.47

 
27.49

 
29.14

 
31.60

 
34.20

 
37.92

 
40.11

 
34.83

 
37.61

            Retail Centers
17.51

 
18.22

 
20.07

 
20.74

 
7.78

 
7.89

 
28.27

 
29.13

 
19.73

 
19.97

Total
$
28.28

 
$
30.79

 
$
30.25

 
$
31.50

 
$
18.27

 
$
19.14

 
$
30.15

 
$
31.83

 
$
26.85

 
$
27.85

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
35.30

 
$
32.88

 
$
42.04

 
$
39.42

 
$
32.51

 
$
31.62

 
$
31.81

 
$
31.40

 
$
31.94

 
$
30.90

            Medical Office Buildings
36.28

 
33.16

 
29.48

 
28.82

 
35.23

 
32.72

 
39.34

 
37.20

 
37.04

 
34.30

            Retail Centers
17.91

 
17.62

 
24.43

 
22.89

 
8.74

 
8.53

 
30.40

 
29.32

 
21.48

 
21.15

Total
$
32.66

 
$
30.53

 
$
33.80

 
$
31.79

 
$
19.88

 
$
19.11

 
$
32.18

 
$
31.51

 
$
29.00

 
$
27.93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
17.2
%
 
(0.4
)%
 
8.2
%
 
(2.7
)%
 
5.8
%
 
(1.5
)%
 
7.0
%
 
(0.5
)%
 
8.3
%
 
1.5
 %
            Medical Office Buildings
12.1
%
 
(3.8
)%
 
7.2
%
 
(1.1
)%
 
11.5
%
 
(4.3
)%
 
3.7
%
 
(7.2
)%
 
6.4
%
 
(8.8
)%
            Retail Centers
2.3
%
 
(3.3
)%
 
21.7
%
 
10.4
 %
 
12.3
%
 
8.1
 %
 
7.5
%
 
0.7
 %
 
8.9
%
 
6.0
 %
Total
15.5
%
 
(0.8
)%
 
11.7
%
 
0.9
 %
 
8.9
%
 
(0.1
)%
 
6.7
%
 
(1.0
)%
 
8.0
%
 
0.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
$
7,573,493

 
$
37.66

 
$
2,788,460

 
$
19.79

 
$
565,393

 
$
6.12

 
$
1,035,279

 
$
5.37

 
$
801,452

 
$
10.44

Medical Office Buildings
183,219

 
14.98

 
114,252

 
4.67

 
639,396

 
12.94

 
189,280

 
8.89

 
520,981

 
18.61

Retail Centers
—

 
—

 
28,600

 
0.25

 
65,261

 
0.38

 
—

 
—

 
—

 
—

Subtotal
$
7,756,712

 
$
30.74

 
$
2,931,312

 
$
10.54

 
$
1,270,050

 
$
4.04

 
$
1,224,559

 
$
4.70

 
$
1,322,433

 
$
8.03

Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
4,065,164

 
$
20.21

 
$
2,747,403

 
$
19.50

 
$
220,889

 
$
2.40

 
$
454,823

 
$
2.35

 
$
377,421

 
$
4.92

Medical Office Buildings
143,190

 
11.71

 
68,973

 
2.82

 
125,662

 
2.55

 
125,097

 
5.87

 
290,596

 
10.38

Retail Centers
32,725

 
0.84

 
176,809

 
1.57

 
82,993

 
0.48

 
75,176

 
1.63

 
29,104

 
0.49

Subtotal
$
4,241,079

 
$
16.80

 
$
2,993,185

 
$
10.77

 
$
429,544

 
$
1.37

 
$
655,096

 
$
2.52

 
$
697,121

 
$
4.23

Tenant Improvements and Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
11,638,657

 
$
57.87

 
$
5,535,863

 
$
39.29

 
$
786,282

 
$
8.52

 
$
1,490,102

 
$
7.72

 
$
1,178,873

 
$
15.36

Medical Office Buildings
326,409

 
26.69

 
183,225

 
7.49

 
765,058

 
15.49

 
314,377

 
14.76

 
811,577

 
28.99

Retail Centers
32,725

 
0.84

 
205,409

 
1.82

 
148,254

 
0.86

 
75,176

 
1.63

 
29,104

 
0.49

Total
$
11,997,791

 
$
47.54

 
$
5,924,497

 
$
21.31

 
$
1,699,594

 
$
5.41

 
$
1,879,655

 
$
7.22

 
$
2,019,554

 
$
12.26


25



10 Largest Tenants - Based on Annualized Rent
December 31, 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
 
36
 
5.90
%
 
210,354

 
3.34
%
Advisory Board Company
1
 
65
 
3.33
%
 
180,925

 
2.88
%
Booz Allen Hamilton, Inc.
1
 
25
 
2.69
%
 
222,989

 
3.54
%
Engility Corporation
1
 
45
 
2.64
%
 
140,400

 
2.23
%
Patton Boggs LLP
1
 
40
 
2.41
%
 
110,566

 
1.76
%
INOVA Healthcare Services
5
 
53
 
2.40
%
 
110,387

 
1.75
%
Sunrise Assisted Living, Inc.
1
 
9
 
1.43
%
 
81,987

 
1.30
%
General Dynamics
2
 
6
 
1.42
%
 
88,359

 
1.40
%
Epstein, Becker & Green, P.C.
1
 
36
 
1.34
%
 
53,427

 
0.85
%
General Services Administration
3
 
59
 
1.29
%
 
52,282

 
0.83
%
Total/Weighted Average
 
 
38
 
24.85
%
 
1,251,676

 
19.88
%



26



Industry Diversification
December 31, 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
$
66,309,769

 
34.90
%
 
2,032,317

 
32.39
%
Credit Intermediation and Related Activities
17,196,705

 
9.05
%
 
325,782

 
5.19
%
Ambulatory Health Care Services
17,149,870

 
9.03
%
 
457,648

 
7.29
%
Religious, Grantmaking, Civic, Professional, and Similar Organizations
10,028,266

 
5.28
%
 
279,280

 
4.45
%
Food Services and Drinking Places
8,512,144

 
4.48
%
 
274,250

 
4.37
%
Food and Beverage Stores
6,142,553

 
3.23
%
 
320,717

 
5.11
%
Executive, Legislative, and Other General Government Support
5,919,650

 
3.12
%
 
171,587

 
2.74
%
Educational Services
5,545,383

 
2.92
%
 
178,985

 
2.85
%
Administrative and Support Services
4,095,714

 
2.16
%
 
111,136

 
1.77
%
Health and Personal Care Stores
3,581,546

 
1.89
%
 
102,574

 
1.64
%
Broadcasting (except Internet)
3,466,386

 
1.82
%
 
90,810

 
1.45
%
Sporting Goods, Hobby, Book, and Music Stores
3,197,775

 
1.68
%
 
199,803

 
3.18
%
Personal and Laundry Services
3,163,397

 
1.67
%
 
96,890

 
1.54
%
Miscellaneous Store Retailers
3,124,142

 
1.64
%
 
169,038

 
2.69
%
Electronics and Appliance Stores
3,000,153

 
1.58
%
 
169,216

 
2.70
%
Furniture and Home Furnishings Stores
2,976,617

 
1.57
%
 
153,629

 
2.45
%
Nursing and Residential Care Facilities
2,961,940

 
1.56
%
 
88,347

 
1.41
%
Clothing and Clothing Accessories Stores
2,790,032

 
1.47
%
 
139,623

 
2.23
%
Amusement, Gambling, and Recreation Industries
2,042,321

 
1.08
%
 
101,338

 
1.62
%
General Merchandise Stores
1,875,727

 
0.99
%
 
221,503

 
3.53
%
Publishing Industries (except Internet)
1,653,392

 
0.87
%
 
56,144

 
0.90
%
Telecommunications
1,546,878

 
0.81
%
 
41,334

 
0.66
%
Printing and Related Support Activities
1,463,250

 
0.77
%
 
48,775

 
0.78
%
Real Estate
1,428,303

 
0.75
%
 
45,779

 
0.73
%
Computer and Electronic Product Manufacturing
1,247,795

 
0.66
%
 
42,707

 
0.68
%
Construction of Buildings
783,588

 
0.41
%
 
26,392

 
0.42
%
Securities, Commodity Contracts, Other Financial Investments & Related Activities
729,171

 
0.38
%
 
27,017

 
0.43
%
Insurance Carriers and Related Activities
691,538

 
0.36
%
 
23,173

 
0.37
%
Merchant Wholesalers, Durable Goods
544,603

 
0.29
%
 
20,923

 
0.33
%
Transportation Equipment Manufacturing
526,793

 
0.28
%
 
19,864

 
0.32
%
Motor Vehicle and Parts Dealers
511,071

 
0.27
%
 
34,932

 
0.56
%
Merchant Wholesalers, Nondurable Goods
459,011

 
0.24
%
 
29,106

 
0.46
%
Repair and Maintenance
446,683

 
0.24
%
 
20,813

 
0.33
%
Social Assistance
441,569

 
0.23
%
 
16,682

 
0.27
%
Other
4,471,405

 
2.32
%
 
136,430

 
2.16
%
Total
$
190,025,140

 
100.00
%
 
6,274,544

 
100.00
%

27



Lease Expirations
December 31, 2013
Year
 
Number of Leases
 
Rentable Square Feet
 
Percent of Rentable Square Feet
 
Annualized Rent (1)
 
Average Rental Rate
 
Percent of Annualized Rent (1)
Office:
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
92

 
712,539

 
16.87
%
 
$
23,087,621

 
$
32.40

 
14.44
%
2015
 
96

 
575,861

 
13.63
%
 
23,365,858

 
40.58

 
14.61
%
2016
 
98

 
599,018

 
14.18
%
 
19,131,495

 
31.94

 
11.96
%
2017
 
66

 
499,964

 
11.83
%
 
19,805,314

 
39.61

 
12.39
%
2018
 
67

 
292,633

 
6.93
%
 
10,755,258

 
36.75

 
6.73
%
2019 and thereafter
 
171

 
1,544,921

 
36.56
%
 
63,758,070

 
41.27

 
39.87
%
 
 
590

 
4,224,936

 
100.00
%
 
$
159,903,616

 
37.85

 
100.00
%
Medical Office:
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
16

 
80,398

 
22.81
%
 
$
3,382,649

 
$
42.07

 
21.14
%
2015
 
7

 
32,040

 
9.09
%
 
1,397,098

 
43.60

 
8.73
%
2016
 
11

 
49,380

 
14.01
%
 
2,239,161

 
45.35

 
14.00
%
2017
 
9

 
28,266

 
8.02
%
 
1,263,311

 
44.69

 
7.90
%
2018
 
12

 
38,136

 
10.82
%
 
1,689,474

 
44.30

 
10.56
%
2019 and thereafter
 
28

 
124,287

 
35.25
%
 
6,026,383

 
48.49

 
37.67
%
 
 
83

 
352,507

 
100.00
%
 
$
15,998,076

 
45.38

 
100.00
%
Retail:
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
46

 
112,129

 
5.17
%
 
$
2,827,014

 
$
25.21

 
5.74
%
2015
 
51

 
368,672

 
17.01
%
 
7,368,178

 
19.99

 
14.96
%
2016
 
26

 
199,775

 
9.22
%
 
4,206,535

 
21.06

 
8.54
%
2017
 
40

 
241,130

 
11.13
%
 
6,592,770

 
27.34

 
13.39
%
2018
 
41

 
373,421

 
17.23
%
 
5,780,805

 
15.48

 
11.74
%
2019 and thereafter
 
102

 
871,980

 
40.24
%
 
22,477,794

 
25.78

 
45.63
%
 
 
306

 
2,167,107

 
100.00
%
 
$
49,253,096

 
22.73

 
100.00
%
Total:
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
154

 
905,066

 
13.42
%
 
$
29,297,284

 
$
32.37

 
13.01
%
2015
 
154

 
976,573

 
14.48
%
 
32,131,134

 
32.90

 
14.27
%
2016
 
135

 
848,173

 
12.58
%
 
25,577,191

 
30.16

 
11.36
%
2017
 
115

 
769,360

 
11.41
%
 
27,661,395

 
35.95

 
12.29
%
2018
 
120

 
704,190

 
10.44
%
 
18,225,537

 
25.88

 
8.09
%
2019 and thereafter
 
301

 
2,541,188

 
37.67
%
 
92,262,247

 
36.31

 
40.98
%
 
 
979

 
6,744,550

 
100.00
%
 
$
225,154,788

 
33.38

 
100.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Annualized Rent is equal to the rental rate effective at lease expiration (cash basis) multiplied by 12.
 
 

28



Schedule of Properties
December 31, 2013
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET(1)
Office Buildings
 
 
 
 
 
 
 
 
1901 Pennsylvania Avenue
 
Washington, DC
 
1977
 
1960
 
101,000

51 Monroe Street
 
Rockville, MD
 
1979
 
1975
 
222,000

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
 
530,000

600 Jefferson Plaza
 
Rockville, MD
 
1999
 
1985
 
113,000

Wayne Plaza
 
Silver Spring, MD
 
2000
 
1970
 
96,000

Courthouse Square
 
Alexandria, VA
 
2000
 
1979
 
115,000

One Central Plaza
 
Rockville, MD
 
2001
 
1974
 
267,000

1776 G Street
 
Washington, DC
 
2003
 
1979
 
263,000

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

Monument II
 
Herndon, VA
 
2007
 
2000
 
207,000

2000 M Street
 
Washington, DC
 
2007
 
1971
 
230,000

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
 
 
 
 
 
 
 
4,557,000

Medical Office Buildings
 
 
 
 
 
 
 
 
Woodburn Medical Park I
 
Annandale, VA
 
1998
 
1984
 
77,000

Woodburn Medical Park II
 
Annandale, VA
 
1998
 
1988
 
97,000

Prosperity Medical Center I
 
Merrifield, VA
 
2003
 
2000
 
91,000

Prosperity Medical Center II
 
Merrifield, VA
 
2003
 
2001
 
87,000

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

Subtotal
 
 
 
 
 
 
 
427,000



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Schedule of Properties
December 31, 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 (1)
 
Alexandria, VA
 
1994
 
1960/2006
 
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 / 307
 
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

The Paramount/ 135
 
Arlington, VA
 
2013
 
1984
 
141,000

Subtotal (2,674 units)
 
 
 
 
 
 
 
2,278,000

 
 
 
 
 
 
 
 
 
TOTAL
 
 
 
 
 
 
 
9,711,000

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

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Supplemental Definitions

December 31, 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 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.
The Medical Office Portfolio consists of every medical property, as well as undeveloped land, 4661 Kenmore Ave, and two office properties, Woodholme Center and 6565 Arlington Boulevard. We entered into four separate purchase and sale agreements. Transaction I of the Medical Office Portfolio sale and purchase agreement consists of medical office properties (2440 M Street, 15001 Shady Grove Road, 15505 Shady Grove Road, 19500 at Riverside Park formerly Lansdowne Medical Office Building, 9707 Medical Center Drive, CentreMed I and II, 8301 Arlington Boulevard, Sterling Medical Office Building, Shady Grove Medical Village II, Alexandria Professional Center, Ashburn Farm Office Park I, Ashburn Farm Office Park II, Ashburn Farm Office Park III and Woodholme Medical Office Building) and two office properties (6565 Arlington Boulevard and Woodholme Center).  Transaction II of the Medical Office Portfolio purchase and sale agreement consist of undeveloped land (4661 Kenmore Ave). Transaction III of the Medical Office Portfolio purchase and sale agreement consists of medical office properties ( Woodburn Medical Park I and Woodburn Medical Park II, ).  Transaction IV of the Medical Office Portfolio purchase and sale agreement consist of a medical office property (Prosperity Medical Center I and II, and Prosperity Medical Center III).

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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 stabilized properties that were owned for the entirety of the current and prior reporting periods, and exclude properties under redevelopment or development and properties purchased or sold at any time during the periods being compared. We define redevelopment properties as those for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan which has a current impact on operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. Redevelopment and development properties are included in the same-store pool upon completion of the redevelopment or development, and the earlier of achieving 90% occupancy or two years after completion.
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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