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
 
 
 
 
October 23, 2014
 
 
 
WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES
THIRD QUARTER FINANCIAL AND OPERATING RESULTS

Company Posts Significant Same-Store NOI Growth and Occupancy Gains
Washington Real Estate Investment Trust (“Washington REIT” or the “Company”) (NYSE: WRE), a leading owner and operator of commercial and multifamily properties in the Washington, DC area, reported financial and operating results today for the quarter ended September 30, 2014:

Third Quarter 2014 Highlights

•
Generated Core Funds from Operations (FFO) of $0.43 per fully diluted share for the quarter, a $0.02 increase over second quarter 2014
•
Achieved same-store Net Operating Income (NOI) growth of 7.1% over third quarter 2013
•
Improved overall same-store physical occupancy to 93.2% from 92.6% in the second quarter 2014 and 89.4% at the beginning of the year
•
Executed 43 new and renewal commercial leases totaling 263,000 square feet at an average rental rate increase of 9.9% over in-place rents for new leases and an average rental rate increase of 18.7% over in-place rents for renewal leases
•
Narrowed 2014 Core FFO guidance to $1.60 - $1.63 from $1.56 - $1.64

"We are pleased with the strong momentum in same-store NOI growth and occupancy gains seen in the third quarter - which accelerated from last quarter - as a result of the continued lease-up of vacancies, improving tenant retention and progress from the operational enhancements made over the past several quarters," said Paul T. McDermott, President and Chief Executive Officer. "These solid results reflect the continued progress we have made in executing our strategy to improve the overall quality of our portfolio. In addition, our recent off-market acquisition of Spring Valley Retail Center in the affluent northwest Washington, DC submarket also demonstrates our commitment to and execution of our stated strategy focusing on higher quality, urban infill properties in areas with strong demographics. We remain confident in the actions we are taking to transform Washington REIT into a best-in-class operator of commercial real estate in the Washington, DC metro area and to position our company for long-term growth."

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 $28.5 million, or $0.43 per diluted share, for the quarter ended September 30, 2014, compared to $30.6 million, or $0.46 per diluted share, for the prior year period. FFO for the quarter ended September 30, 2014 was $28.0 million, or $0.42 per diluted share, compared to $30.2 million, or $0.45 per diluted share, in the same period one year ago. Core FFO and FFO were impacted by the sale of the Medical Office Portfolio and the subsequent reinvestment of the sale proceeds.

Net income attributable to the controlling interests for the quarter ended September 30, 2014 was $3.7 million, or $0.05 per diluted share, compared to $5.8 million, or $0.09 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 $47.5 million for the quarter ended September 30, 2014, compared to $42.6 million in the same period one year ago and $46.7 million in the second quarter of 2014. Overall portfolio physical occupancy for the third quarter was 90.7%, compared to 88.7% in the same period one year ago and 90.1% in the second quarter of 2014.

Same-store(3) portfolio physical occupancy for the third quarter was 93.2%, compared to 89.8% in the same period one year ago and 92.6% in the second quarter of 2014. Same-store portfolio NOI for the third quarter increased 7.1% compared to the same period one year ago and rental rate growth was 0.9%.
 
▪
Office: 55.9% of Total NOI - Same-store NOI for the third quarter increased 9.2% compared to the same period one year ago. Rental rate growth was 1.6% while same-store physical occupancy increased 520 bps to 91.8%. Sequentially, same-store physical occupancy increased 120 bps compared to the second quarter of 2014.
▪
Retail: 24.5% of Total NOI - Same-store NOI for the second quarter increased 8.1% compared to the same period one year ago. Rental rate growth was 0.8% while same-store physical occupancy increased 300 bps to 94.4%. Sequentially, same-store physical occupancy increased 20 bps compared to the second quarter of 2014.
▪
Multifamily: 19.6% of Total NOI - Same-store NOI for the second quarter decreased 0.1% compared to the same period one year ago. Rental rates decreased 0.8% while same-store physical occupancy increased 40 bps to 94.5%. Sequentially, same-store physical occupancy increased 20 bps compared to the second quarter of 2014.

Leasing Activity

During the third quarter, Washington REIT signed commercial leases totaling 263,000 square feet, including 48,000 square feet of new leases and 215,000 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
37,852

7.4

$
33.77

7.2
%
$
39.62

$
35.54

Retail
10,408

9.8

43.69

18.2
%
15.58

28.03

Total
48,260

7.9

35.91

9.9
%
34.43

33.92

 
 
 
 
 
 
 
Renewal:
 
 
 
 
 
 
Office
44,214

7.4

$
44.95

36.7
%
$
13.47

$
12.05

Retail
170,568

5.1

14.67

7.4
%
—

0.30

Total
214,782

5.6

20.90

18.7
%
2.77

2.72


Acquisition Activity

On October 1, 2014, Washington REIT acquired Spring Valley Retail Center, a 75,000 square foot retail shopping center located in northwest Washington, DC for $40.5 million. Spring Valley is Washington REIT’s fourth acquisition in 2014, representing a total cumulative investment value of approximately $300 million. The 96% leased Spring Valley Retail Center consists of five separate buildings of multi-level retail space in the 4800 block of Massachusetts Avenue located in the affluent Spring Valley neighborhood of northwest Washington, DC. The property has red brick construction and Colonial Revival style architecture, and is part of the local neighborhood retail hub located along Massachusetts Avenue.






Washington Real Estate Investment Trust
Page 3 of 11

Relocation of Corporate Headquarters to Washington, DC

On October 20, 2014, Washington REIT announced plans to relocate its corporate headquarters from Rockville, MD, to the Central Business District of Washington, DC at 1775 Eye Street. The move will commence in the fourth quarter and is expected to be completed by January 2015. Acquired by Washington REIT earlier this year, 1775 Eye Street, is an eleven-story office building with a two-level parking garage, located at the intersection of 18th and Eye Street, in northwest DC. Following the move, Washington REIT will continue to maintain a presence at its current office located at 6110 Executive Boulevard in Rockville, MD.

Earnings Guidance

Management is narrowing its 2014 Core FFO guidance from $1.56 - $1.64 to $1.60 - $1.63. The improvement in range reflects stronger than expected same-store NOI growth in the office and retail divisions.

Dividends

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

Conference Call Information

The Conference Call for Third Quarter Earnings is scheduled for Friday, October 24, 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 November 7, 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:                13591510

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 55 properties, totaling approximately 7 million square feet of commercial space and 2,890 multifamily units, and land held for development. These 55 properties consist of 25 office properties, 17 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 executive retirements or resignations 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
 
3rd QTR
 
3rd QTR
 
3rd QTR
 
3rd QTR
Segment
2014
 
2013
 
2014
 
2013
Multifamily
94.5
%
 
94.1
%
 
94.3
%
 
94.1
%
Office
91.8
%
 
86.6
%
 
87.1
%
 
86.1
%
Medical Office
—
%
 
—
%
 
—
%
 
84.6
%
Retail
94.4
%
 
91.4
%
 
94.4
%
 
91.4
%
 
 
 
 
 
 
 
 
Overall Portfolio
93.2
%
 
89.8
%
 
90.7
%
 
88.7
%

(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 Q3 2014 and Q3 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 Q3 2014 and Q3 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 September 30,
 
Nine Months Ended September 30,
OPERATING RESULTS
2014
 
2013
 
2014
 
2013
Revenue
 
 
 
 
 
 
 
Real estate rental revenue
$
73,413

 
$
65,828

 
$
214,278

 
$
196,303

Expenses
 
 
 
 
 
 
 
Real estate expenses
25,914

 
23,243

 
77,784

 
69,467

Depreciation and amortization
24,354

 
21,168

 
71,508

 
63,328

Acquisition costs
69

 
148

 
5,047

 
448

General and administrative
4,523

 
3,850

 
13,780

 
11,717

 
54,860

 
48,409

 
168,119

 
144,960

Other operating income
 
 
 
 
 
 
 
     Gain on sale of real estate
—

 
—

 
570

 
—

Real estate operating income
18,553

 
17,419

 
46,729

 
51,343

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(15,087
)
 
(15,930
)
 
(44,602
)
 
(47,944
)
Other income
192

 
220

 
634

 
705

 
(14,895
)
 
(15,710
)
 
(43,968
)
 
(47,239
)
 
 
 
 
 
 
 
 
Income from continuing operations
3,658

 
1,709

 
2,761

 
4,104

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

 
4,131

 
546

 
11,139

Gain on sale of real estate
—

 
—

 
105,985

 
3,195

Income from discontinued operations
—

 
4,131

 
106,531

 
14,334

Net income
3,658

 
5,840

 
109,292

 
18,438

Less: Net loss attributable to noncontrolling interests in subsidiaries
10

 
—

 
17

 
—

Net income attributable to the controlling interests
$
3,668

 
$
5,840

 
$
109,309

 
$
18,438

 
 
 
 
 
 
 
 
Income from continuing operations attributable to the controlling interests
3,668

 
1,709

 
2,778

 
4,104

Continuing operations real estate depreciation and amortization
24,354

 
21,168

 
71,508

 
63,328

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

 
—

 
(570
)
 
—

Funds from continuing operations(1)
$
28,022

 
$
22,877

 
$
73,716

 
$
67,432

 
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
—

 
4,131

 
546

 
11,139

Discontinued operations real estate depreciation and amortization
—

 
3,215

 
—

 
12,161

Funds from discontinued operations
—

 
7,346

 
546

 
23,300

 
 
 
 
 
 
 
 
Funds from operations(1)
$
28,022

 
$
30,223

 
$
74,262

 
$
90,732

 
 
 
 
 
 
 
 
Tenant improvements
(4,882
)
 
(3,957
)
 
(17,751
)
 
(13,850
)
External and internal leasing commissions capitalized
(4,090
)
 
(3,746
)
 
(9,093
)
 
(8,694
)
Recurring capital improvements
(1,720
)
 
(1,917
)
 
(4,218
)
 
(4,949
)
Straight-line rents, net
(658
)
 
(578
)
 
(1,734
)
 
(1,404
)
Non-cash fair value interest expense
32

 
255

 
257

 
764

Non real estate depreciation & amortization of debt costs
994

 
939

 
2,770

 
2,830

Amortization of lease intangibles, net
704

 
129

 
1,620

 
256

Amortization and expensing of restricted share and unit compensation
1,307

 
1,215

 
3,777

 
3,588

Funds available for distribution(4)
$
19,709

 
$
22,563

 
$
49,890

 
$
69,273



Washington Real Estate Investment Trust
Page 7 of 11


 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Per share data:
 
2014
 
2013
 
2014
 
2013
 Income from continuing operations
(Basic)
$
0.05

 
$
0.03

 
$
0.04

 
$
0.06

 
(Diluted)
$
0.05

 
$
0.03

 
$
0.04

 
$
0.06

Net income
(Basic)
$
0.05

 
$
0.09

 
$
1.63

 
$
0.27

 
(Diluted)
$
0.05

 
$
0.09

 
$
1.63

 
$
0.27

Funds from continuing operations
(Basic)
$
0.42

 
$
0.34

 
$
1.11

 
$
1.01

 
(Diluted)
$
0.42

 
$
0.34

 
$
1.11

 
$
1.01

Funds from operations
(Basic)
$
0.42

 
$
0.45

 
$
1.11

 
$
1.36

 
(Diluted)
$
0.42

 
$
0.45

 
$
1.11

 
$
1.36

 
 
 
 
 
 
 
 
 
Dividends paid
 
$
0.3000

 
$
0.3000

 
$
0.9000

 
$
0.9000

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
66,738

 
66,410

 
66,725

 
66,403

Fully diluted weighted average shares outstanding
 
66,790

 
66,561

 
66,760

 
66,545




Washington Real Estate Investment Trust
Page 8 of 11

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

 
$
426,575

Income producing property
1,867,752

 
1,675,652

 
2,387,611

 
2,102,227

Accumulated depreciation and amortization
(620,279
)
 
(565,342
)
Net income producing property
1,767,332

 
1,536,885

Properties under development or held for future development
99,500

 
61,315

Total real estate held for investment, net
1,866,832

 
1,598,200

Investment in real estate held for sale, net
—

 
79,901

Cash and cash equivalents
8,571

 
130,343

Restricted cash
9,496

 
9,189

Rents and other receivables, net of allowance for doubtful accounts of $5,519 and $6,783, respectively
58,135

 
48,756

Prepaid expenses and other assets
116,345

 
105,004

Other assets related to properties sold or held for sale
—

 
4,100

Total assets
$
2,059,379

 
$
1,975,493

 
 
 
 
Liabilities
 
 
 
Notes payable
$
747,082

 
$
846,703

Mortgage notes payable
413,330

 
294,671

Lines of credit
5,000

 
—

Accounts payable and other liabilities
64,153

 
51,742

Advance rents
12,211

 
13,529

Tenant security deposits
8,625

 
7,869

Liabilities related to properties sold or held for sale
—

 
1,533

Total liabilities
1,250,401

 
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; 66,663 and 66,531 shares issued and outstanding, respectively
667

 
665

Additional paid-in capital
1,153,344

 
1,151,174

Distributions in excess of net income
(347,724
)
 
(396,880
)
Total shareholders' equity
806,287

 
754,959

 
 
 
 
Noncontrolling interests in subsidiaries
2,691

 
4,487

Total equity
808,978

 
759,446

 
 
 
 
Total liabilities and equity
$
2,059,379

 
$
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):
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2014
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
8,090

 
$
23,665

 
$
11,621

 
$
43,376

Add: Net operating income from non-same-store properties(3)
1,226

 
2,897

 
—

 
4,123

Total net operating income(2)
$
9,316

 
$
26,562

 
$
11,621

 
$
47,499

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
192

Acquisition costs
 
 
 
 
 
 
(69
)
Interest expense
 
 
 
 
 
 
(15,087
)
Depreciation and amortization
 
 
 
 
 
 
(24,354
)
General and administrative expenses
 
 
 
 
 
 
(4,523
)
Net income
 
 
 
 
 
 
3,658

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
10

Net income attributable to the controlling interests
 
 
 
 
 
 
$
3,668

 
 
 
 
 
 
 
 
Three Months Ended September 30, 2013
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
8,098

 
$
21,662

 
$
10,754

 
$
40,514

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

 
2,042

 
29

 
2,071

Total net operating income(2)
$
8,098

 
$
23,704

 
$
10,783

 
$
42,585

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
220

Acquisition costs
 
 
 
 
 
 
(148
)
Interest expense
 
 
 
 
 
 
(15,930
)
Depreciation and amortization
 
 
 
 
 
 
(21,168
)
General and administrative expenses
 
 
 
 
 
 
(3,850
)
Discontinued operations:
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
4,131

Net income
 
 
 
 
 
 
5,840

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
—

Net income attributable to the controlling interests
 
 
 
 
 
 
$
5,840






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):
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2014
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
23,467

 
$
68,714

 
$
33,511

 
$
125,692

Add: Net operating income from non-same-store properties(3)
3,501

 
7,275

 
26

 
10,802

Total net operating income(2)
$
26,968

 
$
75,989

 
$
33,537

 
$
136,494

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
634

Acquisition costs
 
 
 
 
 
 
(5,047
)
Interest expense
 
 
 
 
 
 
(44,602
)
Depreciation and amortization
 
 
 
 
 
 
(71,508
)
General and administrative expenses
 
 
 
 
 
 
(13,780
)
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
 
 
 
 
 
 
109,292

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
17

Net income attributable to the controlling interests
 
 
 
 
 
 
$
109,309

 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2013
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
23,934

 
$
64,939

 
$
31,665

 
$
120,538

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

 
6,213

 
85

 
6,298

Total net operating income(2)
$
23,934

 
$
71,152

 
$
31,750

 
$
126,836

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
705

Acquisition costs
 
 
 
 
 
 
(448
)
Interest expense
 
 
 
 
 
 
(47,944
)
Depreciation and amortization
 
 
 
 
 
 
(63,328
)
General and administrative expenses
 
 
 
 
 
 
(11,717
)
Discontinued operations:
 
 
 
 
 
 
 
Income from operations of properties sold or held for sale
 
 
 
 
 
 
11,139

Gain on sale of real estate
 
 
 
 
 
 
3,195

Net income
 
 
 
 
 
 
18,438

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
—

Net income attributable to the controlling interests
 
 
 
 
 
 
$
18,438




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 September 30,
 
Nine Months Ended September 30,
 
 
2014
 
2013
 
2014
 
2013
Net income attributable to the controlling interests
 
$
3,668

 
$
5,840

 
$
109,309

 
$
18,438

Add/(deduct):
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
 
24,354

 
21,168

 
71,508

 
63,328

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

 
—

 
(570
)
 
—

Discontinued operations:
 
 
 
 
 
 
 
 
Gain on sale of real estate
 
—

 
—

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

 
3,215

 
—

 
12,161

Funds from operations(1)
 
28,022

 
30,223

 
74,262

 
90,732

Add/(deduct):
 
 
 
 
 
 
 
 
Acquisition costs
 
69

 
148

 
5,047

 
448

Severance expense
 
394

 
250

 
1,018

 
333

Core funds from operations(1)
 
$
28,485

 
$
30,621

 
$
80,327

 
$
91,513

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Per share data:
 
2014
 
2013
 
2014
 
2013
Funds from operations
(Basic)
$
0.42

 
$
0.45

 
$
1.11

 
$
1.36

 
(Diluted)
$
0.42

 
$
0.45

 
$
1.11

 
$
1.36

Core FFO
(Basic)
$
0.43

 
$
0.46

 
$
1.20

 
$
1.37

 
(Diluted)
$
0.43

 
$
0.46

 
$
1.20

 
$
1.37

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
66,738

 
66,410

 
66,725

 
66,403

Fully diluted weighted average shares outstanding
 
66,790

 
66,561

 
66,760

 
66,545