WASHINGTON REAL ESTATE
INVESTMENT TRUST
NEWS RELEASE
CONTACT:
 
6110 Executive Blvd., Suite 800
William T. Camp
Rockville, Maryland 20852
Executive Vice President and
Tel 301-984-9400
Chief Financial Officer
Fax 301-984-9610
E-Mail: bcamp@writ.com
www.washingtonreit.com
 
 
 
 
July 24, 2014
 
 
 
WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES
SECOND QUARTER FINANCIAL AND OPERATING RESULTS

Strategic Actions Gaining Traction; Company Achieves Significant Same-Store NOI Growth
Washington Real Estate Investment Trust (“Washington REIT” or the “Company”) (NYSE: WRE), a leading owner and operator of diversified properties in the Washington, DC region, reported financial and operating results today for the quarter ended June 30, 2014:

Second Quarter 2014 Highlights

•
Generated Core Funds from Operations (FFO) of $0.41 per fully diluted share for the quarter, a $0.05 increase over first quarter 2014
•
Achieved same-store Net Operating Income (NOI) growth of 6.1% over second quarter 2013
•
Improved overall same-store physical occupancy to 92.6% from 90.2% in the first quarter 2014
•
Executed 62 new and renewal commercial leases totaling 222,000 square feet at an average rental rate increase of 9.0% over in-place rents for new leases and average rental rate increase of 7.3% over in-place rents for renewal leases
•
Acquired 1775 Eye Street, NW, a 185,000 square foot office building located in Washington, DC, for $104.5 million
•
Announced the election of Mr. Benjamin S. Butcher, an additional independent member, to the Board of Trustees

"The actions we have taken over the past several months are gaining traction and positively impacting our results as we continue to successfully execute on our strategy to improve the overall quality of Washington REIT’s asset portfolio,” said Paul T. McDermott, President and Chief Executive Officer. “In the second quarter, Washington REIT achieved significant same-store NOI growth as a result of substantial occupancy gains, and we are also beginning to see strong positive momentum in Core FFO from our acquisitions this year, including 1775 Eye Street which we acquired in May. Going forward, we will build on this momentum and drive shareholder value by continuing to improve our internal operations, aggressively filling vacancies, increasing tenant retention and selectively acquiring additional high-quality assets in the DC and Greater Washington region."

Financial Highlights

Core Funds from Operations(1), defined as Funds from Operations(1) (“FFO”) excluding acquisition expense, gains or losses on extinguishment of debt, severance expense and impairment, was $27.7 million, or $0.41 per diluted share for the quarter ended June 30, 2014, compared to $31.2 million, or $0.47 per diluted share for the prior year period. FFO for the quarter ended June 30, 2014 was $25.2 million, or $0.38 per diluted share, compared to $30.8 million, or $0.46 per diluted share, in the same period one year ago. This decrease in Core Funds from Operations is primarily due to the reinvestment timing of the Medical Office Building sale proceeds.

Net income attributable to the controlling interests for the quarter ended June 30, 2014 was $1.1 million, or $0.02 per diluted share, compared to $5.3 million, or $0.08 per diluted share, in the same period one year ago.


Washington Real Estate Investment Trust
Page 2 of 11



Operating Results

The Company's overall portfolio Net Operating Income (“NOI”)(2) was $46.7 million for the quarter ended June 30, 2014 compared to $42.2 million in the same period one year ago and $42.3 million in the first quarter of 2014. Overall portfolio physical occupancy for the second quarter was 90.1%, compared to 89.1% in the same period one year ago and 88.4% in the first quarter of 2014.

Same-store(3) portfolio physical occupancy for the second quarter was 92.6%, compared to 90.0% in the same period one year ago and 90.2% in the first quarter of 2014. Same-store portfolio NOI for the second quarter increased 6.1% compared to the same period one year ago and rental rate growth was 0.8%.
 
▪
Office: 55.8% of Total NOI - Same-store NOI for the second quarter increased 8.0% compared to the same period one year ago. Rental rate growth was 1.4% while same-store physical occupancy increased 420 bps to 90.6%. Sequentially, same-store physical occupancy increased 370 bps compared to the first quarter of 2014.
▪
Retail: 24.6% of Total NOI - Same-store NOI for the second quarter increased 8.0% compared to the same period one year ago. Rental rate growth was 0.4% while same-store physical occupancy increased 100 bps to 94.2%. Sequentially, same-store physical occupancy increased 60 bps compared to the first quarter of 2014.
▪
Multifamily: 19.6% of Total NOI - Same-store NOI for the second quarter decreased 1.5% compared to the same period one year ago. Rental rates decreased 0.3% while same-store physical occupancy increased 120 bps to 94.3%. Sequentially, same-store physical occupancy increased 160 bps compared to the first quarter of 2014.

Leasing Activity

During the second quarter, Washington REIT signed commercial leases totaling 222,000 square feet, including 102,000 square feet of new leases and 120,000 square feet of renewal leases, as follows (all dollar amounts are on a per square foot basis):
 
Square Feet
Weighted Average Term
(in years)
Weighted Average Rental Rates
Weighted Average Rental Rate % Increase
Tenant Improvements
Leasing Commissions and Incentives
New:
 
 
 
 
 
 
Office
69,367

5.8

$
35.71

14.7
 %
$
33.59

$
21.80

Retail
32,191

10.2

22.07

-2.3
 %
50.20

9.33

Total
101,558

7.1

30.79

9.0
 %
38.86

17.84

 
 
 
 
 
 
 
Renewal:
 
 
 
 
 
 
Office
109,686

4.8

$
36.12

6.6
 %
$
17.29

$
13.83

Retail
10,645

4.3

50.91

12.8
 %
—

2.56

Total
120,331

4.8

37.42

7.3
 %
15.76

12.84


Acquisition and Disposition Activity

In the second quarter, Washington REIT acquired 1775 Eye Street, NW, a 185,000 square foot office building located in Washington's Central Business District, for $104.5 million. Originally built in 1964, 1775 Eye Street is an eleven-story building with a two-level parking garage located at the intersection of 18th and Eye Street, in Northwest DC. The property is currently undergoing its second renovation, which includes a new modernized lobby, common areas, and fitness facility. 1775 Eye Street was originally renovated in 1997 when the owner replaced the facade, storefronts and all of the building systems. 1775 Eye Street is directly across from Farragut West (Blue and Orange Lines) and two blocks from Farragut North (Red Line) Metro Stations.




Washington Real Estate Investment Trust
Page 3 of 11



Other Developments

During the quarter, Washington REIT announced the election of Mr. Benjamin S. Butcher, an additional independent member, to the Board of Trustees. Mr. Butcher currently serves as the Chief Executive Officer, President and Chairman of the Board of Directors of STAG Industrial, Inc., a publicly traded real estate company focused on acquisition, ownership and management of single tenant industrial properties throughout the United States since its inception in 2011. Mr. Butcher joined the Washington REIT's Board of Trustees effective July 1, 2014.

Earnings Guidance

Management reiterates 2014 Core FFO guidance of $1.56-$1.64 per fully diluted share.

Dividends

On June 30, 2014, Washington REIT paid a quarterly dividend of $0.30 per share.

Conference Call Information

The Conference Call for 2nd Quarter Earnings is scheduled for Friday, July 25, 2014 at 11:00 A.M. Eastern time. Conference Call access information is as follows:

USA Toll Free Number:            1-877-407-9205
International Toll Number:        1-201-689-8054

The instant replay of the Conference Call will be available until August 8, 2014 at 11:59 P.M. Eastern time. Instant replay access information is as follows:

USA Toll Free Number:            1-877-660-6853
International Toll Number:        1-201-612-7415
Conference ID:                13585552

The live on-demand webcast of the Conference Call will be available on the Investor section of Washington REIT's website at www.washingtonreit.com. On-line playback of the webcast will be available for two weeks following the Conference Call.

About Washington REIT

Washington REIT is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington metro region. Washington REIT owns a diversified portfolio of 54 properties, totaling approximately 7 million square feet of commercial space and 2,890 multifamily units, and land held for development. These 54 properties consist of 25 office properties, 16 retail centers and 13 multifamily properties. Washington REIT shares are publicly traded on the New York Stock Exchange (NYSE:WRE).
Note: Washington REIT's press releases and supplemental financial information are available on the company website at www.washingtonreit.com or by contacting Investor Relations at (301) 984-9400.
Certain statements in our earnings release and on our conference call are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements in this earnings release preceded by, followed by or that include the words “believe,” “expect,” “intend,” “anticipate,” “potential,” “project,” “will” and other similar expressions. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, the potential for federal government budget reductions, changes in general and local economic and real estate market conditions, the timing and pricing of lease transactions, the availability and cost of capital, fluctuations in interest rates, tenants' financial conditions, levels of competition, the effect of government regulation, the impact of newly adopted accounting principles, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2013 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.


Washington Real Estate Investment Trust
Page 4 of 11


(1) Funds From Operations (“FFO”) - The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) defines FFO (April, 2002 White Paper) as net income (computed in accordance with generally accepted accounting principles (“GAAP”)) excluding gains (or losses) associated with sales of property, impairment of depreciable real estate and real estate depreciation and amortization. FFO is a non-GAAP measure and does not replace net income as a measure of performance or net cash provided by operating activities as a measure of liquidity. We consider FFO to be a standard supplemental measure for equity real estate investment trusts (“REITs”) because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which historically assumes that the value of real estate assets diminishes predictably over time. Since real estate values have instead historically risen or fallen with market conditions, we believe that FFO more accurately provides investors an indication of our ability to incur and service debt, make capital expenditures and fund other needs.

Core Funds From Operations (“Core FFO”) is calculated by adjusting FFO for the following items (which we believe are not indicative of the performance of Washington REIT's operating portfolio and affect the comparative measurement of Washington REIT'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 prior 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 Washington REIT's ability to incur and service debt and to distribute dividends to its shareholders. Core FFO is a non-GAAP and non-standardized measure and may be calculated differently by other REITs.

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

(3) For purposes of evaluating comparative operating performance, we categorize our properties as “same-store” or “non-same-store”. A same-store property is one that was owned for the entirety of the periods being evaluated and excludes properties under redevelopment or development and properties purchased or sold at any time during the periods being compared. A non-same-store property is one that was acquired, under redevelopment or development, or placed into service during either of the periods being evaluated. 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. Properties under redevelopment or development are included within the non-same-store properties beginning in the period during which redevelopment or development activities commence. 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.

(4) Funds Available for Distribution (“FAD”) is a non-GAAP measure. It is calculated by subtracting from FFO (1) recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding (3) non-real estate depreciation and amortization, (4) 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.


Washington Real Estate Investment Trust
Page 5 of 11

Physical Occupancy Levels by Same-Store Properties (i) and All Properties
 
Physical Occupancy
 
Same-Store Properties
 
All Properties
 
2nd QTR
 
2nd QTR
 
2nd QTR
 
2nd QTR
Segment
2014
 
2013
 
2014
 
2013
Multifamily
94.3
%
 
93.1
%
 
93.7
%
 
93.1
%
Office
90.6
%
 
86.4
%
 
86.2
%
 
86.3
%
Medical Office
—
%
 
—
%
 
—
%
 
84.8
%
Retail
94.2
%
 
93.2
%
 
94.2
%
 
93.2
%
 
 
 
 
 
 
 
 
Overall Portfolio
92.6
%
 
90.0
%
 
90.1
%
 
89.1
%

(i) Same-Store 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. For Q2 2014 and Q2 2013, same-store properties exclude:

Multifamily Acquisitions: The Paramount and Yale West;
Office Acquisitions: The Army Navy Club Building and 1775 Eye Street;
Office Redevelopment: 7900 Westpark Drive;
Retail Acquisitions: none.

Also excluded from Same-Store Properties in Q2 2014 and Q2 2013 are:

Sold Properties: The Medical Office Portfolio (Woodholme Center, 6565 Arlington Boulevard, 2440 M Street, 15001 Shady Grove Road, 15005 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).
Retail sold property: 5740 Columbia Road (parcel of land at Gateway Overlook).



Washington Real Estate Investment Trust
Page 6 of 11

 WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
OPERATING RESULTS
2014
 
2013
 
2014
 
2013
Revenue
 
 
 
 
 
 
 
Real estate rental revenue
$
72,254

 
$
65,915

 
$
140,865

 
$
130,475

Expenses
 
 
 
 
 
 
 
Real estate expenses
25,528

 
23,670

 
51,870

 
46,224

Depreciation and amortization
24,401

 
21,037

 
47,154

 
42,160

Acquisition costs
1,933

 
87

 
4,978

 
300

General and administrative
4,828

 
4,005

 
9,257

 
7,867

 
56,690

 
48,799

 
113,259

 
96,551

Other operating income
 
 
 
 
 
 
 
     Gain on sale of real estate
570

 
—

 
570

 
—

Real estate operating income
16,134

 
17,116

 
28,176

 
33,924

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(14,985
)
 
(15,824
)
 
(29,515
)
 
(32,014
)
Other income
219

 
246

 
442

 
485

 
(14,766
)
 
(15,578
)
 
(29,073
)
 
(31,529
)
 
 
 
 
 
 
 
 
Income (loss) from continuing operations
1,368

 
1,538

 
(897
)
 
2,395

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

 
3,725

 
546

 
7,008

(Loss) gain on sale of real estate
(288
)
 
—

 
105,985

 
3,195

(Loss) income from discontinued operations
(288
)
 
3,725

 
106,531

 
10,203

Net income
1,080

 
5,263

 
105,634

 
12,598

Less: Net loss attributable to noncontrolling interests in subsidiaries
7

 
—

 
7

 
—

Net income attributable to the controlling interests
$
1,087

 
$
5,263

 
$
105,641

 
$
12,598

 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to the controlling interests
1,375

 
1,538

 
(890
)
 
2,395

Continuing operations real estate depreciation and amortization
24,401

 
21,037

 
47,154

 
42,160

Gain on sale of real estate (classified as continuing operations)
(570
)
 
—

 
(570
)
 
—

Funds from continuing operations(1)
$
25,206

 
$
22,575

 
$
45,694

 
$
44,555

 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
—

 
3,725

 
546

 
7,008

Discontinued operations real estate depreciation and amortization
—

 
4,545

 
—

 
8,946

Funds from discontinued operations
—

 
8,270

 
546

 
15,954

 
 
 
 
 
 
 
 
Funds from operations(1)
$
25,206

 
$
30,845

 
$
46,240

 
$
60,509

 
 
 
 
 
 
 
 
Tenant improvements
(7,970
)
 
(5,918
)
 
(12,869
)
 
(9,893
)
External and internal leasing commissions capitalized
(3,363
)
 
(2,342
)
 
(5,003
)
 
(4,948
)
Recurring capital improvements
(1,610
)
 
(2,311
)
 
(2,498
)
 
(3,032
)
Straight-line rents, net
(723
)
 
(483
)
 
(1,076
)
 
(826
)
Non-cash fair value interest expense
30

 
255

 
225

 
509

Non real estate depreciation & amortization of debt costs
904

 
933

 
1,776

 
1,891

Amortization of lease intangibles, net
677

 
86

 
916

 
127

Amortization and expensing of restricted share and unit compensation
1,429

 
1,355

 
2,470

 
2,373

Funds available for distribution(4)
$
14,580

 
$
22,420

 
$
30,181

 
$
46,710

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


Washington Real Estate Investment Trust
Page 7 of 11


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Per share data:
 
2014
 
2013
 
2014
 
2013
 Income (loss) from continuing operations
(Basic)
$
0.02

 
$
0.02

 
$
(0.01
)
 
$
0.04

 
(Diluted)
$
0.02

 
$
0.02

 
$
(0.01
)
 
$
0.04

Net income
(Basic)
$
0.02

 
$
0.08

 
$
1.58

 
$
0.19

 
(Diluted)
$
0.02

 
$
0.08

 
$
1.58

 
$
0.19

Funds from continuing operations
(Basic)
$
0.38

 
$
0.34

 
$
0.68

 
$
0.67

 
(Diluted)
$
0.38

 
$
0.34

 
$
0.68

 
$
0.67

Funds from operations
(Basic)
$
0.38

 
$
0.46

 
$
0.69

 
$
0.91

 
(Diluted)
$
0.38

 
$
0.46

 
$
0.69

 
$
0.91

 
 
 
 
 
 
 
 
 
Dividends paid
 
$
0.3000

 
$
0.3000

 
$
0.6000

 
$
0.6000

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
66,732

 
66,405

 
66,718

 
66,399

Fully diluted weighted average shares outstanding
 
66,761

 
66,556

 
66,718

 
66,537

Fully diluted weighted average shares outstanding (for FFO)
66,761

 
66,556

 
66,744

 
66,537




Washington Real Estate Investment Trust
Page 8 of 11

WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
 
 
 
 
June 30, 2014
 
 
 
(unaudited)
 
December 31, 2013
Assets
 
 
 
Land
$
519,859

 
$
426,575

Income producing property
1,853,982

 
1,675,652

 
2,373,841

 
2,102,227

Accumulated depreciation and amortization
(600,171
)
 
(565,342
)
Net income producing property
1,773,670

 
1,536,885

Development in progress
83,970

 
61,315

Total real estate held for investment, net
1,857,640

 
1,598,200

Investment in real estate held for sale, net
—

 
79,901

Cash and cash equivalents
23,009

 
130,343

Restricted cash
11,369

 
9,189

Rents and other receivables, net of allowance for doubtful accounts of $5,765 and $6,783 respectively
55,583

 
48,756

Prepaid expenses and other assets
112,548

 
105,004

Other assets related to properties sold or held for sale
—

 
4,100

Total assets
$
2,060,149

 
$
1,975,493

 
 
 
 
Liabilities
 
 
 
Notes payable
$
746,956

 
$
846,703

Mortgage notes payable
406,975

 
294,671

Lines of credit
—

 
—

Accounts payable and other liabilities
59,719

 
51,742

Advance rents
13,172

 
13,529

Tenant security deposits
8,686

 
7,869

Liabilities related to properties sold or held for sale
—

 
1,533

Total liabilities
1,235,508

 
1,216,047

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

 
—

Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 66,636 and 66,531 shares issued and outstanding, respectively
666

 
665

Additional paid-in capital
1,152,647

 
1,151,174

Distributions in excess of net income
(331,373
)
 
(396,880
)
Total shareholders' equity
821,940

 
754,959

 
 
 
 
Noncontrolling interests in subsidiaries
2,701

 
4,487

Total equity
824,641

 
759,446

 
 
 
 
Total liabilities and equity
$
2,060,149

 
$
1,975,493





Washington Real Estate Investment Trust
Page 9 of 11

The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands):
 
 
 
 
 
 
 
 
Quarter Ended June 30, 2014
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
7,774

 
$
23,212

 
$
11,517

 
$
42,503

Add: Net operating income from non-same-store properties(3)
1,371

 
2,847

 
5

 
4,223

Total net operating income(2)
$
9,145

 
$
26,059

 
$
11,522

 
$
46,726

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
219

Acquisition costs
 
 
 
 
 
 
(1,933
)
Interest expense
 
 
 
 
 
 
(14,985
)
Depreciation and amortization
 
 
 
 
 
 
(24,401
)
General and administrative expenses
 
 
 
 
 
 
(4,828
)
Gain on sale of real estate (classified as continuing operations)
 
 
 
 
 
 
570

Discontinued operations:
 
 
 
 
 
 
 
Gain on sale of real estate
 
 
 
 
 
 
(288
)
Net income
 
 
 
 
 
 
1,080

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
7

Net income attributable to the controlling interests
 
 
 
 
 
 
$
1,087

 
 
 
 
 
 
 
 
Quarter Ended June 30, 2013
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
7,893

 
$
21,496

 
$
10,668

 
$
40,057

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

 
2,158

 
30

 
2,188

Total net operating income(2)
$
7,893

 
$
23,654

 
$
10,698

 
$
42,245

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
246

Acquisition costs
 
 
 
 
 
 
(87
)
Interest expense
 
 
 
 
 
 
(15,824
)
Depreciation and amortization
 
 
 
 
 
 
(21,037
)
General and administrative expenses
 
 
 
 
 
 
(4,005
)
Discontinued operations:
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
3,725

Net income
 
 
 
 
 
 
5,263

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
—

Net income attributable to the controlling interests
 
 
 
 
 
 
$
5,263






Washington Real Estate Investment Trust
Page 10 of 11

The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands):
 
 
 
 
 
 
 
 
Period Ended June 30, 2014
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
15,377

 
$
45,049

 
$
21,890

 
$
82,316

Add: Net operating income from non-same-store properties(3)
2,275

 
4,378

 
26

 
6,679

Total net operating income(2)
$
17,652

 
$
49,427

 
$
21,916

 
$
88,995

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
442

Acquisition costs
 
 
 
 
 
 
(4,978
)
Interest expense
 
 
 
 
 
 
(29,515
)
Depreciation and amortization
 
 
 
 
 
 
(47,154
)
General and administrative expenses
 
 
 
 
 
 
(9,257
)
Gain on sale of real estate (classified as continuing operations)
 
 
 
 
 
 
570

Discontinued operations:
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
546

Gain on sale of real estate
 
 
 
 
 
 
105,985

Net income
 
 
 
 
 
 
105,634

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
7

Net income attributable to the controlling interests
 
 
 
 
 
 
$
105,641

 
 
 
 
 
 
 
 
Period Ended June 30, 2013
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
15,836

 
$
43,277

 
$
20,911

 
$
80,024

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

 
4,171

 
56

 
4,227

Total net operating income(2)
$
15,836

 
$
47,448

 
$
20,967

 
$
84,251

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
485

Acquisition costs
 
 
 
 
 
 
(300
)
Interest expense
 
 
 
 
 
 
(32,014
)
Depreciation and amortization
 
 
 
 
 
 
(42,160
)
General and administrative expenses
 
 
 
 
 
 
(7,867
)
Discontinued operations:
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
7,008

Gain on sale of real estate
 
 
 
 
 
 
3,195

Net income
 
 
 
 
 
 
12,598

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
—

Net income attributable to the controlling interests
 
 
 
 
 
 
$
12,598




Washington Real Estate Investment Trust
Page 11 of 11

The following table contains a reconciliation of net income attributable to the controlling interests to core funds from operations for the periods presented (in thousands, except per share data):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Net income attributable to the controlling interests
 
$
1,087

 
$
5,263

 
$
105,641

 
$
12,598

Add/(deduct):
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
 
24,401

 
21,037

 
47,154

 
42,160

Gain on sale of real estate (classified as continuing operations)
 
(570
)
 
—

 
(570
)
 
—

Discontinued operations:
 
 
 
 
 
 
 
 
Loss (gain) on sale of real estate
 
288

 
—

 
(105,985
)
 
(3,195
)
Real estate depreciation and amortization
 
—

 
4,545

 
—

 
8,946

Funds from operations(1)
 
25,206

 
30,845

 
46,240

 
60,509

Add/(deduct):
 
 
 
 
 
 
 
 
Acquisition costs
 
1,933

 
87

 
4,978

 
300

Severance expense
 
576

 
266

 
624

 
83

Core funds from operations(1)
 
$
27,715

 
$
31,198

 
$
51,842

 
$
60,892

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Per share data:
 
2014
 
2013
 
2014
 
2013
Funds from operations
(Basic)
$
0.38

 
$
0.46

 
$
0.69

 
$
0.91

 
(Diluted)
$
0.38

 
$
0.46

 
$
0.69

 
$
0.91

Core FFO
(Basic)
$
0.42

 
$
0.47

 
$
0.77

 
$
0.91

 
(Diluted)
$
0.41

 
$
0.47

 
$
0.77

 
$
0.91

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
66,732

 
66,405

 
66,718

 
66,399

Fully diluted weighted average shares outstanding (for FFO)
 
66,761

 
66,556

 
66,744

 
66,537