Washington Real Estate Investment Trust
 
 
Fourth Quarter 2015
 
 
                 
 
 
Supplemental Operating and Financial Data
 
 
Contact:
 
1775 Eye Street, NW
 
 
Tejal R. Engman
 
 Suite 1000
 
 
Director of Investor Relations
 
Washington, DC 20006
 
 
E-mail: tengman@washreit.com
 
(202) 774-3200
 
 
 
 
(301) 984-9610 fax
 
 
 
 
 
 
 
 




Company Background and Highlights
Fourth Quarter 2015
Washington REIT (Washington Real Estate Investment Trust - NYSE: WRE) is a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington, DC region. Washington REIT is diversified, as it invests in office, retail, and multifamily properties and land for development.

2015 Highlights

2015 was a year of strong execution for Washington REIT as the Company successfully leased-up three key assets, Silverline Center in Tysons, VA, The Maxwell in Arlington, VA, and 1775 Eye Street in Washington, DC, and recycled approximately $138 million of legacy assets, including land, into the $167 million acquisition of The Wellington, a 711 unit multifamily asset in Arlington, VA, including land for development.

During the year, Washington REIT executed approximately 1.3 million square feet of commercial lease transactions. The Company's commercial portfolio was approximately 93% leased at year-end.

Following the appointment of Stephen E. Riffee, Executive Vice President and Chief Financial Officer, in February 2015, Washington REIT favorably renewed its unsecured credit facility to extend maturity, better align the facility with the Company's value-add business model, increase the available line of credit to $600 million, improve financial covenants and lower pricing, which remains based upon the Company's unsecured debt rating. On September 15, 2015 the Company entered into a five and a half year $150 million unsecured term loan, which was swapped from a floating to an all-in fixed interest rate of 2.72% and used to repay amounts outstanding on the credit facility.


Fourth Quarter 2015 Update and Recent Activity

During the fourth quarter, Washington REIT sold two legacy assets, Munson Hill Towers and Montgomery Village Center, in sales that were structured as part of a reverse-1031 exchange in connection with the acquisition of The Wellington, which the company acquired in the third quarter of 2015. Munson Hill Towers, a 258,000 square foot Class B high-rise of 279 units located in Falls Church, Virginia was sold for $57.1 million or approximately $204,000 per unit. Montgomery Village Center, a 197,000 square foot, grocery-anchored community shopping center in Montgomery Village, Maryland, was sold for $27.8 million dollars.

The Company also placed a select portfolio of suburban office assets on the market in January 2016.

Including the 137,000 square foot Fortune 100 anchor tenant signed at Silverline Center in Tysons, VA, Washington REIT signed commercial leases totaling approximately 295,000 square feet, including 220,000 square feet of new leases and 75,000 square feet of renewal leases. New leases had an average rental rate increase of 21.1% over expiring lease rates on a GAAP basis and an average lease term of 6.5 years. Commercial tenant improvements costs were $63.29 per square foot and leasing commissions and incentives were $36.12 per square foot for new leases. Renewal leases had an average rental rate increase of 8.3% over expiring lease rates on a GAAP basis and an average lease term of 5.1 years. Commercial tenant improvements costs were $21.17 per square foot and leasing commissions and incentives were $14.48 per square foot for renewal leases.

As of December 31, 2015, Washington REIT owned a diversified portfolio of 54 properties totaling approximately 7 million square feet of commercial space and 3,258 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).




Company Background and Highlights
Fourth Quarter 2015

Net Operating Income Contribution by Sector - Fourth Quarter 2015






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 2014 Form 10-K filed on March 2, 2015 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, 2015
Schedule
Page
Key Financial Data
 
 
Consolidated Statements of 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
12/31/2015
 
12/31/2014
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
Real estate rental revenue
$
306,427

 
$
288,637

 
$
79,102

 
$
78,243

 
$
74,226

 
$
74,856

 
$
74,359

Real estate expenses
(112,234
)
 
(103,695
)
 
(27,688
)
 
(28,109
)
 
(27,229
)
 
(29,208
)
 
(25,911
)
 
194,193

 
184,942

 
51,414

 
50,134

 
46,997

 
45,648

 
48,448

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
(108,935
)
 
(96,011
)
 
(28,808
)
 
(29,349
)
 
(25,503
)
 
(25,275
)
 
(24,503
)
Income from real estate
85,258

 
88,931

 
22,606

 
20,785

 
21,494

 
20,373

 
23,945

 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative expenses
(20,257
)
 
(19,761
)
 
(4,918
)
 
(4,953
)
 
(4,306
)
 
(6,080
)
 
(5,981
)
Real estate impairment
(5,909
)
 
—

 
—

 
—

 
(5,909
)
 
—

 
—

Acquisition costs
(2,056
)
 
(5,710
)
 
(119
)
 
(929
)
 
(992
)
 
(16
)
 
(663
)
Interest expense
(59,546
)
 
(59,785
)
 
(15,012
)
 
(14,486
)
 
(14,700
)
 
(15,348
)
 
(15,183
)
Other income
709

 
825

 
162

 
163

 
192

 
192

 
191

Gain on sale of real estate
91,107

 
570

 
59,376

 
—

 
1,454

 
30,277

 
—

Loss on extinguishment of debt
(119
)
 
—

 
—

 
—

 
(119
)
 
—

 
—

Income (loss) from continuing operations
89,187

 
5,070

 
62,095

 
580

 
(2,886
)
 
29,398

 
2,309

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

 
546

 
—

 
—

 
—

 
—

 
—

  Gain on sale of real estate
—

 
105,985

 
—

 
—

 
—

 
—

 
—

Income from discontinued operations
—

 
106,531

 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
89,187

 
111,601

 
62,095

 
580

 
(2,886
)
 
29,398

 
2,309

Less: Net loss from noncontrolling interests
553

 
38

 
38

 
67

 
340

 
108

 
21

Net income attributable to the controlling interests
$
89,740

 
$
111,639

 
$
62,133

 
$
647

 
$
(2,546
)
 
$
29,506

 
$
2,330

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to the controlling interests
$
1.31

 
$
1.67

 
$
0.91

 
$
0.01

 
$
(0.04
)
 
$
0.43

 
$
0.03

Fully diluted weighted average shares outstanding
68,310

 
66,837

 
68,371

 
68,305

 
68,176

 
68,191

 
67,065

Percentage of Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
36.6
%
 
35.9
%
 
35.0
%
 
35.9
%
 
36.7
 %
 
39.0
%
 
34.8
%
General and administrative expenses
6.6
%
 
6.8
%
 
6.2
%
 
6.3
%
 
5.8
 %
 
8.1
%
 
8.0
%
Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA / Interest expense
3.0
x
 
2.8
x
 
3.1
x
 
3.2
x
 
3.0
x
 
2.7
x
 
3.0
x
Income (loss) from continuing operations/Total real estate revenue
29.1
%
 
1.8
%
 
78.5
%
 
0.7
%
 
(3.9
)%
 
39.3
%
 
3.1
%
Net income attributable to the controlling interest/Total real estate revenue
29.3
%
 
38.7
%
 
78.5
%
 
0.8
%
 
(3.4
)%
 
39.4
%
 
3.1
%
 
 
 

4



Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
Assets
 
 
 
 
 
 
 
 
 
Land
$
561,256

 
$
572,880

 
$
542,654

 
$
543,247

 
$
543,546

Income producing property
2,076,541

 
2,074,425

 
1,966,612

 
1,932,908

 
1,927,407

 
2,637,797

 
2,647,305

 
2,509,266

 
2,476,155

 
2,470,953

Accumulated depreciation and amortization
(692,608
)
 
(677,480
)
 
(670,103
)
 
(649,279
)
 
(640,434
)
Net income producing property
1,945,189

 
1,969,825

 
1,839,163

 
1,826,876

 
1,830,519

Development in progress, including land held for development
36,094

 
35,256

 
35,314

 
65,656

 
76,235

Total real estate held for investment, net
1,981,283

 
2,005,081

 
1,874,477

 
1,892,532

 
1,906,754

Investment in real estate held for sale, net
—

 
5,010

 
—

 
—

 
—

Cash and cash equivalents
23,825

 
21,012

 
22,778

 
40,025

 
15,827

Restricted cash
13,383

 
12,544

 
13,705

 
13,095

 
10,299

Rents and other receivables, net of allowance for doubtful accounts
62,890

 
62,306

 
61,577

 
60,215

 
59,745

Prepaid expenses and other assets
109,787

 
117,167

 
112,852

 
112,165

 
115,692

Other assets related to properties sold or held for sale
—

 
278

 
—

 
—

 
—

Total assets
$
2,191,168

 
$
2,223,398

 
$
2,085,389

 
$
2,118,032

 
$
2,108,317

Liabilities
 
 
 
 
 
 
 
 
 
Notes payable
$
743,181

 
$
742,971

 
$
593,755

 
$
743,477

 
$
743,149

Mortgage notes payable, net
418,052

 
418,400

 
418,637

 
417,906

 
417,194

Lines of credit/short-term note payable
105,000

 
195,000

 
185,000

 
30,000

 
50,000

Accounts payable and other liabilities
45,367

 
54,131

 
50,281

 
65,447

 
54,318

Dividend payable
20,434

 
—

 
—

 
—

 
—

Advance rents
12,744

 
10,766

 
13,733

 
14,471

 
12,528

Tenant security deposits
9,378

 
9,225

 
9,053

 
8,892

 
8,899

Other liabilities related to properties sold or held for sale
—

 
329

 
—

 
—

 
—

Total liabilities
1,354,156

 
1,430,822

 
1,270,459

 
1,280,193

 
1,286,088

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

 
—

 
—

 
—

 
—

Shares of beneficial interest, $0.01 par value; 100,000 shares authorized
682

 
682

 
682

 
681

 
678

Additional paid-in capital
1,193,298

 
1,192,202

 
1,191,594

 
1,191,123

 
1,184,395

Distributions in excess of net income
(357,781
)
 
(399,421
)
 
(379,577
)
 
(356,531
)
 
(365,518
)
Accumulated other comprehensive loss
(550
)
 
(2,288
)
 
—

 
—

 
—

Total shareholders' equity
835,649

 
791,175

 
812,699

 
835,273

 
819,555

Noncontrolling interests in subsidiaries
1,363

 
1,401

 
2,231

 
2,566

 
2,674

Total equity
837,012

 
792,576

 
814,930

 
837,839

 
822,229

Total liabilities and equity
$
2,191,168

 
$
2,223,398

 
$
2,085,389

 
$
2,118,032

 
$
2,108,317

Total Debt / Total Market Capitalization
0.41
:1
 
0.44
:1
 
0.40
:1
 
0.39
:1
 
0.39
:1
Note: Certain prior period amounts have been reclassified to conform to current period presentation.
 
 
 
 
 
 

5



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

 
 
Twelve Months Ended
 
Three Months Ended
 
12/31/2015
 
12/31/2014
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
Funds from operations (FFO)(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
89,187

 
$
111,601

 
$
62,095

 
$
580

 
$
(2,886
)
 
$
29,398

 
$
2,309

Real estate depreciation and amortization
108,935

 
96,011

 
28,808

 
29,349

 
25,503

 
25,275

 
24,503

Gain on sale of depreciable real estate
(89,653
)
 
(570
)
 
(59,376
)
 
—

 
—

 
(30,277
)
 
—

Discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of real estate
—

 
(105,985
)
 
—

 
—

 
—

 
—

 
—

NAREIT funds from operations (FFO)
$
108,469

 
$
101,057

 
$
31,527

 
$
29,929

 
$
22,617

 
$
24,396

 
$
26,812

Loss on extinguishment of debt
119

 
—

 
—

 
—

 
119

 
—

 
—

Real estate impairment
5,909

 
—

 
—

 
—

 
5,909

 
—

 
—

(Gain) loss on sale of non depreciable real estate
(1,404
)
 
—

 
—

 
50

 
(1,454
)
 
—

 
—

Severance expense
1,001

 
1,600

 
—

 
—

 
—

 
1,001

 
582

Relocation expense
90

 
764

 
—

 
—

 
26

 
64

 
764

Acquisition and structuring expenses
2,721

 
5,710

 
189

 
1,034

 
1,264

 
234

 
663

Core FFO (1)
$
116,905

 
$
109,131

 
$
31,716

 
$
31,013

 
$
28,481

 
$
25,695

 
$
28,821

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
$
(269
)
 
$
(317
)
 
$
(180
)
 
$
(47
)
 
$
(80
)
 
$
(108
)
 
$
(53
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share - basic
$
1.59

 
$
1.51

 
$
0.46

 
$
0.44

 
$
0.33

 
$
0.36

 
$
0.40

FFO per share - fully diluted
$
1.58

 
$
1.51

 
$
0.46

 
$
0.44

 
$
0.33

 
$
0.36

 
$
0.40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core FFO per share - fully diluted
$
1.71

 
$
1.63

 
$
0.46

 
$
0.45

 
$
0.42

 
$
0.38

 
$
0.43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common dividend declared per share
$
1.20

 
$
1.20

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shares - basic
68,177

 
66,795

 
68,204

 
68,186

 
68,176

 
68,141

 
67,002

Average shares - fully diluted
68,310

 
66,837

 
68,371

 
68,305

 
68,375

 
68,191

 
67,065

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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.
 
 
 
 


6



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

 

 
Twelve Months Ended
 
Three Months Ended
 
12/31/2015
 
12/31/2014
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
Funds available for distribution (FAD)(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
NAREIT FFO
$
108,469

 
$
101,057

 
$
31,527

 
$
29,929

 
$
22,617

 
$
24,396

 
$
26,812

Non-cash loss on extinguishment of debt
119

 
—

 
—

 
—

 
119

 
—

 
—

Tenant improvements and incentives
(19,170
)
 
(29,664
)
 
(6,792
)
 
(5,231
)
 
(3,417
)
 
(3,730
)
 
(7,103
)
Leasing commissions
(6,895
)
 
(12,083
)
 
(2,426
)
 
(1,714
)
 
(1,149
)
 
(1,606
)
 
(7,800
)
Recurring capital improvements
(6,048
)
 
(6,029
)
 
(3,296
)
 
(1,326
)
 
(737
)
 
(689
)
 
(1,811
)
Straight-line rent, net
(1,344
)
 
(2,821
)
 
(533
)
 
(680
)
 
(538
)
 
407

 
(1,087
)
Non-cash fair value interest expense
150

 
290

 
41

 
38

 
36

 
35

 
33

Non-real estate depreciation and amortization
3,979

 
4,348

 
980

 
938

 
1,123

 
938

 
1,578

Amortization of lease intangibles, net
3,576

 
2,349

 
925

 
913

 
970

 
768

 
729

Amortization and expensing of restricted share and unit compensation
5,007

 
4,911

 
1,123

 
863

 
1,195

 
1,826

 
1,134

Funds available for distribution (FAD)
$
87,843

 
$
62,358

 
$
21,549

 
$
23,730

 
$
20,219

 
$
22,345

 
$
12,485

(Gain) loss on sale of real estate, non depreciable assets
(1,404
)
 
—

 
—

 
50

 
(1,454
)
 
—

 
—

Non-share-based severance expense
196

 
1,424

 
—

 
—

 
—

 
196

 
546

Relocation expense
107

 
85

 
—

 
—

 
26

 
81

 
85

Acquisition and structuring expenses
2,721

 
5,710

 
189

 
1,034

 
1,264

 
234

 
663

Real estate impairment
5,909

 
—

 
$
—

 
$
—

 
$
5,909

 
$
—

 
$
—

Core FAD (1)
$
95,372

 
$
69,577

 
$
21,738

 
$
24,814

 
$
25,964

 
$
22,856

 
$
13,779

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
$
(269
)
 
$
(317
)
 
$
(180
)
 
$
(47
)
 
$
(80
)
 
$
(108
)
 
$
(53
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FAD per share - basic
$
1.28

 
$
0.93

 
$
0.31

 
$
0.35

 
$
0.30

 
$
0.33

 
$
0.19

FAD per share - fully diluted
$
1.28

 
$
0.93

 
$
0.31

 
$
0.35

 
$
0.29

 
$
0.33

 
$
0.19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core FAD per share - fully diluted
$
1.39

 
$
1.04

 
$
0.32

 
$
0.36

 
$
0.38

 
$
0.33

 
$
0.20

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common dividend declared per share
$
1.20

 
$
1.20

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shares - basic
68,177

 
66,795

 
68,204

 
68,186

 
68,176

 
68,141

 
67,002

Average shares - fully diluted (for FFO and FAD)
68,310

 
66,837

 
68,371

 
68,305

 
68,375

 
68,191

 
67,065

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  See "Supplemental Definitions" on page 31 of this supplemental for the definitions of FAD and Core FAD.
 
 
 
 
(2)  Adjustment to the numerators for FAD and Core FAD per share calculations when applying the two-class method for calculating EPS.
 
 
 
 


7



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

 
Twelve Months Ended
 
Three Months Ended
 
12/31/2015
 
12/31/2014
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
Adjusted EBITDA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
89,187

 
$
111,601

 
$
62,095

 
$
580

 
$
(2,886
)
 
$
29,398

 
$
2,309

Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, including discontinued operations
59,546

 
59,785

 
15,012

 
14,486

 
14,700

 
15,348

 
15,183

Real estate depreciation and amortization, including discontinued operations
108,935

 
96,011

 
28,808

 
29,349

 
25,503

 
25,275

 
24,503

Income tax expense
134

 
117

 
65

 
41

 
28

 
—

 
—

Real estate impairment
5,909

 
—

 
—

 
—

 
5,909

 
—

 
—

Non-real estate depreciation
598

 
1,279

 
149

 
168

 
178

 
103

 
793

Severance expense
1,001

 
1,600

 
—

 
—

 
—

 
1,001

 
582

Relocation expense
90

 
764

 
—

 
—

 
26

 
64

 
764

Acquisition and structuring expenses
2,721

 
5,710

 
189

 
1,034

 
1,264

 
234

 
663

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
    (Gain) loss on sale of real estate
(91,057
)
 
(106,555
)
 
(59,376
)
 
50

 
(1,454
)
 
(30,277
)
 
—

    Loss on extinguishment of debt
119

 
—

 
—

 
—

 
119

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
$
177,183

 
$
170,312

 
$
46,942

 
$
45,708

 
$
43,387

 
$
41,146

 
$
44,797

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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, severance expense, relocation expense, acquisition and structuring expense, gain from non-disposal activities and allocations to noncontrolling interests. We consider Adjusted EBITDA to be an appropriate supplemental performance measure because it permits investors to view income from operations without the effect of depreciation, the cost of debt or non-operating gains and losses. Adjusted EBITDA is a non-GAAP measure.


8



Long Term Debt Analysis
($'s in thousands)
 

 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
Balances Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Mortgage note payable, net
$
418,052

 
$
418,400

 
$
418,637

 
$
417,906

 
$
417,194

Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds and notes
594,164

 
594,002

 
593,755

 
743,477

 
743,149

Term loans
149,017

 
148,969

 
—

 
—

 
—

Credit facilities
105,000

 
195,000

 
185,000

 
30,000

 
50,000

Unsecured total
848,181

 
937,971

 
778,755

 
773,477

 
793,149

Total
$
1,266,233

 
$
1,356,371

 
$
1,197,392

 
$
1,191,383

 
$
1,210,343

 
 
 
 
 
 
 
 
 
 
Average Interest Rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Mortgage note payable, net
5.2
%
 
5.2
%
 
5.2
%
 
5.2
%
 
5.2
%
Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds
4.7
%
 
4.7
%
 
4.7
%
 
4.9
%
 
4.9
%
Term loans (1)
2.7
%
 
2.7
%
 
—
%
 
—
%
 
—
%
Credit facilities
1.4
%
 
1.2
%
 
1.2
%
 
1.4
%
 
1.4
%
Unsecured total
4.0
%
 
3.7
%
 
3.9
%
 
4.7
%
 
4.7
%
Average
4.4
%
 
4.2
%
 
4.4
%
 
4.9
%
 
4.9
%
 
 
 
 
 
 
 
 
 
 
(1) Washington REIT entered into an interest rate swap to swap from a LIBOR plus 110 basis points floating interest rate to a 2.72% all-in fixed interest rate commencing October 15, 2015.
Note: The current debt balances outstanding are shown net of discounts, premiums and unamortized debt costs (see page 10 of this Supplemental).





9


Long Term Debt Maturities
(in thousands, except average interest rates)
 
 
 
 
Future Maturities of Debt (in thousands, except for %)
Year
Secured Debt
 
Unsecured Debt
 
Credit Facility
 
Total Debt
 
Average Interest Rate
2016
$
164,223

 
$
—

 
$
—

 
$
164,223

 
5.1%
2017
150,903

 
—

 
—

 
150,903

 
5.9%
2018
—

 
—

 
—

 
—

 
—%
2019
31,280

 
—

 
105,000

(1) 
136,280

 
2.3%
2020
—

 
250,000

 
—

 
250,000

 
5.1%
2021
—

 
150,000

(2) 
—

 
150,000

 
2.7%
2022
44,517

 
300,000

 
—

 
344,517

 
4.0%
2023
—

 
—

 
—

 
—

 
—%
2024
—

 
—

 
—

 
—

 
—%
2025
—

 
—

 
—

 
—

 
—%
2026
—

 
—

 
—

 
—

 
—%
Thereafter
—

 
50,000

 
—

 
50,000

 
7.4%
Scheduled principal payments
$
390,923

 
$
750,000

 
$
105,000

 
$
1,245,923

 
4.1%
Scheduled amortization payments
23,623

 
—

 
—

 
23,623

 
4.8%
Net discounts/premiums
4,175

 
(2,362
)
 
—

 
1,813

 
—%
Loan costs, net of amortization
(669
)
 
(4,457
)
 
—

 
(5,126
)
 
—%
Total maturities
$
418,052

 
$
743,181

 
$
105,000

 
$
1,266,233

 
4.4%
Weighted average maturity = 4.6 years
(1) Maturity date for credit facility may be extended for up to two additional 6-month periods at Washington REIT's option.
(2) Washington REIT entered into an interest rate swap to swap from a LIBOR plus 110 basis points floating interest rate to a 2.72% all-in fixed interest rate commencing October 15, 2015.

10



Debt Covenant Compliance
 
 

 
Unsecured Notes Payable
 
Unsecured Line of Credit
($600.0 million)
 
Quarter Ended December 31, 2015
 
Covenant
 
Quarter Ended December 31, 2015
 
Covenant
% of Total Indebtedness to Total Assets(1)
46.2
%
 
≤ 65.0%
 
 N/A

 
N/A
Ratio of Income Available for Debt Service to Annual Debt Service
3.2

 
≥ 1.5
 
 N/A

 
N/A
% of Secured Indebtedness to Total Assets(1)
15.1
%
 
≤ 40.0%
 
 N/A

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

 
≥ 1.5
 
 N/A

 
N/A
% of Net Consolidated Total Indebtedness to Consolidated Total Asset Value(3)
 N/A

 
 N/A
 
39.2
%
 
≤ 60.0%
Ratio of Consolidated Adjusted EBITDA(4) to Consolidated Fixed Charges(5)
 N/A

 
 N/A
 
3.01

 
≥ 1.50
% of Consolidated Secured Indebtedness to Gross Total Asset Value(3)
 N/A

 
 N/A
 
13.0
%
 
≤ 40.0%
% of Consolidated Unsecured Indebtedness to Unencumbered Pool Value(6) 
 N/A

 
 N/A
 
33.6
%
 
≤ 60.0%
Ratio of Unencumbered Adjusted Net Operating Income to Consolidated Unsecured Interest Expense
 N/A

 
 N/A
 
4.04

 
≥ 1.75
 
 
 
 
 
 
 
 
(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) Consolidated Total Asset Value is the sum of unrestricted cash plus the quotient of applying a capitalization rate to the annualized NOI from the most recently ended quarter for each asset class, excluding NOI from disposed properties, acquisitions during the past 6 quarters, development, major redevelopment and low occupancy properties. To this amount, we add the purchase price of acquisitions during the past 6 quarters plus values for development, major redevelopment and low occupancy properties.
(4) Consolidated Adjusted EBITDA is defined as earnings before noncontrolling interests, depreciation, amortization, interest expense, income tax expense, acquisition costs, extraordinary, unusual or nonrecurring transactions including sale of assets, impairment, gains and losses on extinguishment of debt and other non-cash charges.
(5) Consolidated Fixed Charges consist of interest expense excluding capitalized interest and amortization of deferred financing costs, principal payments and preferred dividends, if any.
(6) Unencumbered Pool Value is the sum of unrestricted cash plus the quotient of applying a capitalization rate to the annualized NOI from unencumbered properties from the most recently ended quarter for each asset class excluding NOI from disposed properties, acquisitions during the past 6 quarters, development, major redevelopment and low occupancy properties. To this we add the purchase price of unencumbered acquisitions during the past 6 quarters and values for unencumbered development, major redevelopment and low occupancy properties.

11


        

Capital Analysis
(In thousands, except per share amounts)
 
 
 
 
 
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
Market Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares Outstanding
 
 
 
 
68,191

 
68,180

 
68,162

 
68,126

 
67,819

Market Price per Share
 
 
 
 
$
27.06

 
$
24.93

 
$
25.95

 
$
27.63

 
$
27.66

Equity Market Capitalization
 
 
 
 
$
1,845,248

 
$
1,699,727

 
$
1,768,804

 
$
1,882,321

 
$
1,875,874

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
 
 
 
$
1,266,233

 
$
1,356,371

 
$
1,197,392

 
$
1,191,383

 
$
1,210,343

Total Market Capitalization
 
 
 
 
$
3,111,481

 
$
3,056,098

 
$
2,966,196

 
$
3,073,704

 
$
3,086,217

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt to Market Capitalization
 
 
 
 
0.41
:1
 
0.44
:1
 
0.40
:1
 
0.39
:1
 
0.39
:1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings to Fixed Charges(1)
 
 
 
 
5.1x

 
1.0x

 
0.8x

 
2.9x

 
1.1x

Debt Service Coverage Ratio(2)
 
 
 
 
2.9x

 
2.9x

 
2.7x

 
2.5x

 
2.8x

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
Three Months Ended
 
12/31/2015
 
12/31/2014
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
Total Dividends Declared
$
82,003

 
$
80,277

 
$
20,493

 
$
20,491

 
$
20,500

 
$
20,519

 
$
20,124

Common Dividend Declared per Share
$
1.20

 
$
1.20

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

Payout Ratio (Core FFO per share basis)
70.3
%
 
73.6
%
 
65.0
%
 
66.7
%
 
71.4
%
 
78.9
%
 
69.8
%
Payout Ratio (Core FAD per share basis)
86.2
%
 
115.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations attributable to the controlling interests plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized.
(2)  Debt service coverage ratio is computed by dividing Adjusted EBITDA (see page 8) by interest expense and principal amortization.





12



Same-Store Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth
2015 vs. 2014
 

 
 
Three Months Ended December 31, (1)
 
 
 
 
 
Twelve Months Ended December 31, (2)
 
 
 
 
 
 
2015
 
2014
 
% Change
 
Rental Rate Growth
 
2015
 
2014
 
% Change
 
Rental Rate Growth
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
$
8,034

 
$
8,430

 
(4.7
)%
 
(1.0
)%
 
$
28,343

 
$
28,780

 
(1.5
)%
 
(1.8
)%
Office
 
27,909

 
25,552

 
9.2
 %
 
1.3
 %
 
96,431

 
91,761

 
5.1
 %
 
2.2
 %
Retail
 
11,362

 
11,621

 
(2.2
)%
 
3.1
 %
 
42,650

 
42,831

 
(0.4
)%
 
2.4
 %
Overall Same-Store Portfolio
 
$
47,305

 
$
45,603

 
3.7
 %
(3) 
1.2
 %
 
$
167,424

 
$
163,372

 
2.5
 %
(3) 
1.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Basis:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
$
8,029

 
$
8,435

 
(4.8
)%
 
(1.1
)%
 
$
28,327

 
$
28,916

 
(2.0
)%
 
(1.8
)%
Office
 
27,163

 
25,522

 
6.4
 %
 
—
 %
 
94,178

 
92,276

 
2.1
 %
 
1.0
 %
Retail
 
11,792

 
12,096

 
(2.5
)%
 
3.5
 %
 
42,970

 
43,436

 
(1.1
)%
 
2.8
 %
Overall Same-Store Portfolio
 
$
46,984

 
$
46,053

 
2.0
 %
(3) 
0.4
 %
 
$
165,475

 
$
164,628

 
0.5
 %
(3) 
0.8
 %
(1) Non same-store properties were:
Acquisition:
Multifamily - The Wellington
Development/Redevelopment:
Multifamily - The Maxwell
Office - Silverline Center          
Sold properties classified as continuing operations:
Multifamily - Country Club Towers and Munson Hill Towers
Retail - Montgomery Village Center
(2) Non same-store properties were the same properties listed in footnote 1 above, plus the following properties:
Acquisitions:
Multifamily - Yale West
Office - Army Navy Club and 1775 Eye Street, NW
Retail - Spring Valley Retail Center
Sold properties classified as continuing operations:
Retail - 5740 Columbia Road (parcel at Gateway Overlook)
Sold properties classified as discontinued operations:
Medical Office/Office - Woodholme Medical Center I & II and Prosperity Medical Center I, II & III

(3) Without the impact of lease termination fees, overall same-store cash NOI growth would have been 1.9% and 2.1% for the three and twelve months ended December 31, 2015, respectively, and overall same-store GAAP NOI growth would have been 0.2% and 0.1% for the three and twelve months ended December 31, 2015, respectively.


13



Same-Store Portfolio Net Operating Income (NOI) Detail
(In thousands)
 
 
Three Months Ended December 31, 2015
 
Multifamily
 
Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
13,644

 
$
42,599

 
$
15,086

 
$
—

 
$
71,329

Non same-store - acquired and in development(1)
4,582

 
2,524

 
667

 
—

 
7,773

                         Total
18,226

 
45,123

 
15,753

 
—

 
79,102

 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store portfolio
5,615

 
15,436

 
3,294

 
—

 
24,345

Non same-store - acquired and in development(1)
1,974

 
1,195

 
174

 
—

 
3,343

                         Total
7,589

 
16,631

 
3,468

 
—

 
27,688

 
 
 
 
 
 
 
 
 
 
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store portfolio
8,029

 
27,163

 
11,792

 
—

 
46,984

Non same-store - acquired and in development(1)
2,608

 
1,329

 
493

 
—

 
4,430

                          Total
$
10,637

 
$
28,492

 
$
12,285

 
$
—

 
$
51,414

 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
8,029

 
$
27,163

 
$
11,792

 
$
—

 
$
46,984

Straight-line revenue, net for same-store properties
4

 
(169
)
 
(236
)
 
—

 
(401
)
FAS 141 Min Rent
1

 
396

 
(253
)
 
—

 
144

Amortization of lease intangibles for same-store properties
—

 
519

 
59

 
—

 
578

Same-store portfolio NOI, cash basis
$
8,034

 
$
27,909

 
$
11,362

 
$
—

 
$
47,305

Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
Total NOI
$
10,637

 
$
28,492

 
$
12,285

 
$
—

 
$
51,414

Depreciation and amortization
(7,507
)
 
(17,209
)
 
(3,801
)
 
(291
)
 
(28,808
)
General and administrative expenses
—

 
—

 
—

 
(4,918
)
 
(4,918
)
Acquisition costs
—

 
—

 
—

 
(119
)
 
(119
)
Interest expense
(2,489
)
 
(2,999
)
 
(220
)
 
(9,304
)
 
(15,012
)
Other income
—

 
—

 
—

 
162

 
162

Gain on sale of real estate, continuing operations
—

 
—

 
—

 
59,376

 
59,376

Net Income
641

 
8,284

 
8,264

 
44,906

 
62,095

Net income attributable to noncontrolling interests
—

 
—

 
—

 
38

 
38

Net income attributable to the controlling interests
$
641

 
$
8,284

 
$
8,264

 
$
44,944

 
$
62,133

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


14



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
Three Months Ended December 31, 2014
 
Multifamily
 
Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
13,502

 
$
40,639

 
$
15,229

 


 
$
69,370

Non same-store - acquired and in development(1)
2,255

 
1,909

 
825

 


 
4,989

            Total
15,757

 
42,548

 
16,054

 
—

 
74,359

Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store portfolio
5,067

 
15,117

 
3,133

 


 
23,317

Non same-store - acquired and in development(1)
1,170

 
1,207

 
217

 


 
2,594

            Total
6,237

 
16,324

 
3,350

 
—

 
25,911

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store portfolio
8,435

 
25,522

 
12,096

 
—

 
46,053

Non same-store - acquired and in development(1)
1,085

 
702

 
608

 
—

 
2,395

           Total
$
9,520

 
$
26,224

 
$
12,704

 
$
—

 
$
48,448

 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
8,435

 
$
25,522

 
$
12,096

 
$
—

 
$
46,053

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

 
(710
)
 
(299
)
 


 
(1,008
)
FAS 141 Min Rent
(6
)
 
330

 
(235
)
 


 
89

Amortization of lease intangibles for same-store properties
—

 
410

 
59

 


 
469

Same-store portfolio NOI, cash basis
$
8,430

 
$
25,552

 
$
11,621

 
$
—

 
$
45,603

Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
Total NOI
$
9,520

 
$
26,224

 
$
12,704

 
$
—

 
$
48,448

Depreciation and amortization
(3,997
)
 
(16,580
)
 
(3,690
)
 
(236
)
 
(24,503
)
General and administrative expense
—

 
—

 
—

 
(5,981
)
 
(5,981
)
Acquisition costs
—

 
—

 
—

 
(663
)
 
(663
)
Interest expense
(2,524
)
 
(3,019
)
 
(242
)
 
(9,398
)
 
(15,183
)
Other income
—

 
—

 
—

 
191

 
191

Net income
2,999

 
6,625

 
8,772

 
(16,087
)
 
2,309

Net income attributable to noncontrolling interests
—

 
—

 
—

 
21

 
21

Net income attributable to the controlling interests
$
2,999

 
$
6,625

 
$
8,772

 
$
(16,066
)
 
$
2,330

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

15



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
Twelve Months Ended December 31, 2015
 
Multifamily
 
Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
48,739

 
$
149,664

 
$
56,762

 
$
—

 
$
255,165

Non same-store - acquired and in development 1
19,803

 
24,714

 
6,745

 
—

 
51,262

                         Total
68,542

 
174,378

 
63,507

 
—

 
306,427

Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store portfolio
20,412

 
55,486

 
13,792

 
—

 
89,690

Non same-store - acquired and in development 1
8,988

 
11,742

 
1,814

 
—

 
22,544

                         Total
29,400

 
67,228

 
15,606

 
—

 
112,234

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store portfolio
28,327

 
94,178

 
42,970

 
—

 
165,475

Non same-store - acquired and in development 1
10,815

 
12,972

 
4,931

 
—

 
28,718

                          Total
$
39,142

 
$
107,150

 
$
47,901

 
$
—

 
$
194,193

 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
28,327

 
$
94,178

 
$
42,970

 
$
—

 
$
165,475

Straight-line revenue, net for same-store properties
13

 
59

 
(389
)
 
—

 
(317
)
FAS 141 Min Rent
3

 
173

 
(166
)
 
—

 
10

Amortization of lease intangibles for same-store properties
—

 
2,021

 
235

 
—

 
2,256

Same-store portfolio NOI, cash basis
$
28,343

 
$
96,431

 
$
42,650

 
$
—

 
$
167,424

 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
Total NOI
$
39,142

 
$
107,150

 
$
47,901

 
$
—

 
$
194,193

Depreciation and amortization
(24,356
)
 
(68,567
)
 
(14,949
)
 
(1,063
)
 
(108,935
)
General and administrative expenses
—

 
—

 
—

 
(20,257
)
 
(20,257
)
Real estate impairment
—

 
—

 
—

 
(5,909
)
 
(5,909
)
Loss on extinguishment of debt
—

 
—

 
—

 
(119
)
 
(119
)
Acquisition costs
—

 
—

 
—

 
(2,056
)
 
(2,056
)
Interest expense
(9,816
)
 
(11,951
)
 
(916
)
 
(36,863
)
 
(59,546
)
Other income
—

 
—

 
—

 
709

 
709

Gain on sale of real estate
—

 
—

 
—

 
91,107

 
91,107

Net Income
4,970

 
26,632

 
32,036

 
25,549

 
89,187

Net income attributable to noncontrolling interests
—

 
—

 
—

 
553

 
553

Net income attributable to the controlling interests
$
4,970

 
$
26,632

 
$
32,036

 
$
26,102

 
$
89,740

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

16



Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
Twelve Months Ended December 31, 2014
 
Multifamily
 
Office
 
Medical Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
48,286

 
$
146,542

 
$
—

 
$
56,128

 
$
—

 
$
250,956

Non same-store - acquired and in development 1
13,972

 
19,574

 
—

 
4,135

 
—

 
37,681

                         Total
62,258

 
166,116

 
—

 
60,263

 
—

 
288,637

Real estate expenses
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
19,370

 
54,266

 
—

 
12,692

 
—

 
86,328

Non same-store - acquired and in development 1
6,400

 
9,637

 
—

 
1,330

 
—

 
17,367

                         Total
25,770

 
63,903

 
—

 
14,022

 
—

 
103,695

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio
28,916

 
92,276

 
—

 
43,436

 
—

 
164,628

Non same-store - acquired and in development 1
7,572

 
9,937

 
—

 
2,805

 
—

 
20,314

                          Total
$
36,488

 
$
102,213

 
$
—

 
$
46,241

 
$
—

 
$
184,942

 
 
 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
28,916

 
$
92,276

 
$
—

 
$
43,436

 
$
—

 
$
164,628

Straight-line revenue, net for same-store properties
2

 
(1,843
)
 
—

 
(632
)
 
—

 
(2,473
)
FAS 141 Min Rent
(138
)
 
228

 
—

 
(213
)
 
—

 
(123
)
Amortization of lease intangibles for same-store properties
—

 
1,100

 
—

 
240

 
—

 
1,340

Same-store portfolio NOI, cash basis
$
28,780

 
$
91,761

 
$
—

 
$
42,831

 
$
—

 
$
163,372

Reconciliation of NOI to Net Income
 
 
 
 
 
 
 
 
 
 
 
Total NOI
$
36,488

 
$
102,213

 
$
—

 
$
46,241

 
$
—

 
$
184,942

Depreciation and amortization
(17,999
)
 
(63,768
)
 
—

 
(13,282
)
 
(962
)
 
(96,011
)
General and administrative expenses
—

 
—

 
—

 
—

 
(19,761
)
 
(19,761
)
Acquisition costs
—

 
—

 
—

 
—

 
(5,710
)
 
(5,710
)
Interest expense
(9,313
)
 
(11,606
)
 
—

 
(997
)
 
(37,869
)
 
(59,785
)
Other income
—

 
—

 
—

 
—

 
825

 
825

Gain on sale of real estate
—

 
—

 
—

 
—

 
570

 
570

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

 


 
546

 
—

 
—

 
546

Gain on sale of real estate
—

 
—

 
—

 
—

 
105,985

 
105,985

Net income
9,176

 
26,839

 
546

 
31,962

 
43,078

 
111,601

Net income attributable to noncontrolling interests
—

 
—

 
—

 
—

 
38

 
38

Net income attributable to the controlling interests
$
9,176

 
$
26,839

 
$
546

 
$
31,962

 
$
43,116

 
$
111,639

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

17



Net Operating Income (NOI) by Region
 
 
 
 
 
 
Washington REIT Portfolio
Maryland/Virginia/DC
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of
Q4 2015 NOI
 
Percentage of
YTD 2015 NOI
DC
 
 
 
 
Multifamily
 
5.2
%
 
5.4
%
Office
 
25.4
%
 
25.3
%
Retail
 
1.4
%
 
1.8
%
 
 
32.0
%
 
32.5
%
 
 
 
 
 
Maryland
 
 
 
 
Multifamily
 
2.5
%
 
2.5
%
Office
 
10.8
%
 
10.6
%
Retail
 
15.7
%
 
16.1
%
 
 
29.0
%
 
29.2
%
 
 
 
 
 
Virginia
 
 
 
 
Multifamily
 
13.0
%
 
12.2
%
Office
 
19.3
%
 
19.3
%
Retail
 
6.7
%
 
6.8
%
 
 
39.0
%
 
38.3
%
 
 
 
 
 
Total Portfolio
 
100.0
%
 
100.0
%

18



Same-Store and Overall Physical Occupancy Levels by Sector

 

 
 
Physical Occupancy - Same-Store Properties (1)
Sector
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.3
%
 
93.2
%
 
94.3
%
 
93.6
%
 
93.6
%
Office
 
90.5
%
 
90.8
%
 
91.0
%
 
90.6
%
 
90.9
%
Retail
 
91.5
%
 
95.4
%
 
94.1
%
 
95.4
%
 
95.0
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
91.7
%
 
92.6
%
 
92.6
%
 
92.6
%
 
92.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Physical Occupancy - All Properties
Sector
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
93.4
%
 
92.3
%
 
91.7
%
 
89.5
%
 
93.8
%
Office
 
87.6
%
 
87.8
%
 
87.6
%
 
86.7
%
 
86.9
%
Retail
 
91.5
%
 
94.4
%
 
92.9
%
 
94.7
%
 
94.4
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
90.2
%
 
90.7
%
 
90.0
%
 
89.5
%
 
90.5
%

(1) Non same-store properties were:
Acquisition:
Multifamily - The Wellington
Development/Redevelopment:
Multifamily - The Maxwell
Office - Silverline Center
Sold properties:
Multifamily - Country Club Towers and Munson Hill Towers
Retail - Montgomery Village Center
   



19



Same-Store Portfolio and Overall Economic Occupancy Levels by Sector
 
 
 
Economic Occupancy - Same-Store Properties(1)
Sector
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.5
%
 
95.0
%
 
95.7
%
 
94.8
%
 
94.1
%
Office
 
91.7
%
 
91.3
%
 
91.3
%
 
90.9
%
 
91.1
%
Retail
 
92.0
%
 
93.5
%
 
94.0
%
 
94.4
%
 
95.2
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
92.3
%
 
92.5
%
 
92.7
%
 
92.4
%
 
92.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Occupancy - All Properties
Sector
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
 
12/31/2014
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
93.2
%
 
92.7
%
 
90.6
%
 
88.4
%
 
94.2
%
Office
 
88.3
%
 
87.7
%
 
87.2
%
 
86.5
%
 
86.8
%
Retail
 
91.1
%
 
92.3
%
 
92.9
%
 
93.5
%
 
94.5
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
90.0
%
 
89.8
%
 
89.0
%
 
88.2
%
 
89.8
%


(1) Non same-store properties were:
Acquisition:
Multifamily - The Wellington
Development/Redevelopment:
Multifamily - The Maxwell
Office - Silverline Center
Sold properties:
Multifamily - Country Club Towers and Munson Hill Towers
Retail - Montgomery Village Center
    



20


Acquisition and Disposition Summary
 
December 31, 2015
($'s in thousands)
Acquisition Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
Location
 
Acquisition Date
 
Property type
 
# of units
 
12/31/2015 Leased Percentage
 
Investment
 
The Wellington
Arlington, VA
 
July 1, 2015
 
Multifamily
 
711
 
94.5
%
 
$
167,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Disposition Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
Location
 
Disposition Date
 
Property Type
 
# of units/ square feet
 
Contract Sales Price
 
GAAP Gain
 
Country Club Towers
Arlington, VA
 
March 20, 2015
 
Multifamily
 
227 units
 
$
37,800

 
$
30,277

 
Land interest at 1225 First Street
Alexandria,VA
 
September 9, 2015
 
Multifamily
 
N/A
 
14,500

 
-

 
Munson Hill Towers
Falls Church, VA
 
October 21, 2015
 
Multifamily
 
279 units
 
57,050

 
51,395

 
Montgomery Village Center
Gaithersburg, MD
 
December 14, 2015
 
Retail
 
197,000 square feet
 
27,750

 
7,981

 
 
 
 
 
 
 
 

 
$
137,100

 
$
89,653

 





21


Development/Redevelopment Summary
 
December 31, 2015
(in thousands)
Property and Location
Total Rentable Square Feet
or # of Units
Cash Cost to Date
Draws on Construction Loan to Date
Construction Completion Date
Leased %
Development Summary
 
 
 
 
 
The Maxwell, Arlington, VA
163 units & 2,200 square feet retail
$
47,649

$
32,248

fourth quarter 2014
95.7
%
 
 
 
 
 
 
Redevelopment Summary
 
 
 
 
 
Silverline Center, Tysons, VA
532,000 square feet
$
34,977

N/A

 first quarter 2015
91.7
%




22



Commercial Leasing Summary - New Leases
 
 
 
 
4th Quarter 2015
 
3rd Quarter 2015
 
2nd Quarter 2015
 
1st Quarter 2015
 
4th Quarter 2014
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
220,374
 
 
93,389
 
 
57,693
 
 
61,141
 
 
92,349
 
      Retail
—
 
 
74,102
 
 
35,095
 
 
10,853
 
 
10,965
 
Total
220,374
 
 
167,491
 
 
92,788
 
 
71,994
 
 
103,314
 
Weighted Average Term (yrs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
6.5
 
 
6.8
 
 
6.8
 
 
7.5
 
 
8.5
 
      Retail
0.0
 
 
10.2
 
 
9.6
 
 
11.0
 
 
9.2
 
Total
6.5
 
 
8.3
 
 
7.8
 
 
8.0
 
 
8.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
$
32.57

 
$
33.76

 
$
27.72

 
$
28.67

 
$
36.35

 
$
38.06

 
$
31.43

 
$
33.14

 
$
30.37

 
$
31.66

      Retail
—

 
—

 
22.32

 
22.77

 
23.77

 
25.30

 
41.57

 
41.85

 
34.95

 
35.52

Total
$
32.57

 
$
33.76

 
$
25.33

 
$
26.06

 
$
31.59

 
$
33.23

 
$
32.96

 
$
34.45

 
$
30.85

 
$
32.07

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
$
39.45

 
$
36.62

 
$
36.46

 
$
33.53

 
$
41.61

 
$
38.11

 
$
35.39

 
$
32.49

 
$
38.39

 
$
34.43

      Retail
—

 
—

 
27.61

 
26.14

 
28.17

 
26.42

 
52.79

 
46.99

 
41.82

 
37.65

Total
$
39.45

 
$
36.62

 
$
32.55

 
$
30.26

 
$
36.53

 
$
33.69

 
$
38.01

 
$
34.68

 
$
38.75

 
$
34.77

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
21.1
%
 
8.5
%
 
31.6
%
 
17.0
%
 
14.5
%
 
0.2
%
 
12.6
%
 
(2.0
)%
 
26.4
%
 
8.8
%
      Retail
—
%
 
—
%
 
23.7
%
 
14.8
%
 
18.5
%
 
4.4
%
 
27.0
%
 
12.3
 %
 
19.7
%
 
6.0
%
Total
21.1
%
 
8.5
%
 
28.5
%
 
16.1
%
 
15.6
%
 
1.4
%
 
15.3
%
 
0.7
 %
 
25.6
%
 
8.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
$
13,946,572

 
$
63.29

 
$
4,775,584

 
$
51.14

 
$
2,209,271

 
$
38.29

 
$
3,255,324

 
$
53.24

 
$
4,609,137

 
$
49.91

Retail Centers
—

 
—

 
5,220,923

 
70.46

 
592,351

 
16.88

 
353,335

 
32.56

 
120,600

 
11.00

Subtotal
$
13,946,572

 
$
63.29

 
$
9,996,507

 
$
59.68

 
$
2,801,622

 
$
30.19

 
$
3,608,659

 
$
50.12

 
$
4,729,737

 
$
45.78

Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
7,960,650

 
$
36.12

 
$
4,556,279

 
$
48.79

 
$
1,809,746

 
$
31.37

 
$
2,092,175

 
$
34.22

 
$
3,328,304

 
$
36.04

Retail Centers
—

 
—

 
1,649,704

 
22.26

 
592,483

 
16.88

 
754,661

 
69.53

 
275,428

 
25.12

Subtotal
$
7,960,650

 
$
36.12

 
$
6,205,983

 
$
37.05

 
$
2,402,229

 
$
25.89

 
$
2,846,836

 
$
39.54

 
$
3,603,732

 
$
34.88

Tenant Improvements and Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
21,907,222

 
$
99.41

 
$
9,331,863

 
$
99.93

 
$
4,019,017

 
$
69.66

 
$
5,347,499

 
$
87.46

 
$
7,937,441

 
$
85.95

Retail Centers
—

 
—

 
6,870,627

 
92.72

 
1,184,834

 
33.76

 
1,107,996

 
102.09

 
396,028

 
36.12

Total
$
21,907,222

 
$
99.41

 
$
16,202,490

 
$
96.73

 
$
5,203,851

 
$
56.08

 
$
6,455,495

 
$
89.66

 
$
8,333,469

 
$
80.66


23



Commercial Leasing Summary - Renewal Leases

 
 
4th Quarter 2015
 
3rd Quarter 2015
 
2nd Quarter 2015
 
1st Quarter 2015
 
4th Quarter 2014
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
42,033
 
 
191,599
 
 
71,112
 
 
135,134
 
 
575,499
 
      Retail Centers
32,594
 
 
53,415
 
 
95,048
 
 
111,342
 
 
45,084
 
Total
74,627
 
 
245,014
 
 
166,160
 
 
246,476
 
 
620,583
 
Weighted Average Term (yrs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
6.6
 
 
2.8
 
 
3.9
 
 
4.8
 
 
6.1
 
      Retail Centers
3.3
 
 
4.4
 
 
5.8
 
 
5.4
 
 
6.8
 
Total
5.1
 
 
3.1
 
 
4.9
 
 
5.1
 
 
6.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
35.61

 
$
37.12

 
$
35.23

 
$
37.43

 
$
30.91

 
$
33.07

 
$
35.26

 
$
36.79

 
$
35.87

 
$
37.53

            Retail Centers
21.30

 
22.56

 
23.21

 
23.72

 
17.57

 
18.54

 
16.14

 
16.71

 
33.21

 
35.65

Total
$
29.36

 
$
30.76

 
$
32.61

 
$
34.44

 
$
23.28

 
$
24.76

 
$
26.63

 
$
27.72

 
$
35.67

 
$
37.39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
37.01

 
$
34.12

 
$
31.37

 
$
30.29

 
$
32.43

 
$
31.37

 
$
37.98

 
$
35.99

 
$
37.25

 
$
35.44

            Retail Centers
25.08

 
23.50

 
26.63

 
26.10

 
22.49

 
21.25

 
17.06

 
16.64

 
40.26

 
37.30

Total
$
31.80

 
$
29.49

 
$
30.34

 
$
29.38

 
$
26.75

 
$
25.58

 
$
28.53

 
$
27.25

 
$
37.46

 
$
35.57

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
3.9
%
 
(8.1
)%
 
(11.0
)%
 
(19.1
)%
 
4.9
%
 
(5.1
)%
 
7.7
%
 
(2.2
)%
 
3.9
%
 
(5.6
)%
            Retail Centers
17.8
%
 
4.2
 %
 
14.7
 %
 
10.0
 %
 
28.0
%
 
14.6
 %
 
5.7
%
 
(0.4
)%
 
21.2
%
 
4.6
 %
Total
8.3
%
 
(4.1
)%
 
(7.0
)%
 
(14.7
)%
 
14.9
%
 
3.3
 %
 
7.2
%
 
(1.7
)%
 
5.0
%
 
(4.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
$
1,580,078

 
$
37.59

 
$
580,967

 
$
3.03

 
$
423,589

 
$
5.96

 
$
550,948

 
$
4.08

 
$
14,952,993

 
$
25.98

Retail Centers
—

 
—

 
36,540

 
0.68

 
39,183

 
0.41

 
152,391

 
1.37

 
33,370

 
0.74

Subtotal
$
1,580,078

 
$
21.17

 
$
617,507

 
$
2.52

 
$
462,772

 
$
2.79

 
$
703,339

 
$
2.85

 
$
14,986,363

 
$
24.15

Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
1,021,344

 
$
24.30

 
$
744,977

 
$
3.89

 
$
368,593

 
$
5.19

 
$
929,511

 
$
6.88

 
$
9,087,273

 
$
15.79

Retail Centers
59,302

 
1.82

 
119,946

 
2.25

 
199,976

 
2.10

 
243,602

 
2.19

 
192,343

 
4.27

Subtotal
$
1,080,646

 
$
14.48

 
$
864,923

 
$
3.53

 
$
568,569

 
$
3.43

 
$
1,173,113

 
$
4.76

 
$
9,279,616

 
$
14.96

Tenant Improvements and Leasing Commissions and Incentives
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
2,601,422

 
$
61.89

 
$
1,325,944

 
$
6.92

 
$
792,182

 
$
11.15

 
$
1,480,459

 
$
10.96

 
$
24,040,266

 
$
41.77

Retail Centers
59,302

 
1.82

 
156,486

 
2.93

 
239,159

 
2.51

 
395,993

 
3.56

 
225,713

 
5.01

Total
$
2,660,724

 
$
35.65

 
$
1,482,430

 
$
6.05

 
$
1,031,341

 
$
6.22

 
$
1,876,452

 
$
7.61

 
$
24,265,979

 
$
39.11


24



10 Largest Tenants - Based on Annualized Commercial Income
 
December 31, 2014
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
 
60
 
5.54
%
 
210,354

 
3.35
%
Advisory Board Company
2
 
41
 
3.71
%
 
199,762

 
3.18
%
Booz Allen Hamilton, Inc.
1
 
121
 
2.74
%
 
222,989

 
3.55
%
Engility Corporation
1
 
21
 
2.58
%
 
134,126

 
2.14
%
Squire Patton Boggs (USA) LLP (1)
1
 
16
 
2.44
%
 
110,566

 
1.76
%
Epstein Becker & Green, PC
1
 
12
 
1.37
%
 
53,427

 
0.85
%
General Services Administration
3
 
35
 
1.25
%
 
52,282

 
0.83
%
Hughes Hubbard & Reed LLP
1
 
26
 
1.19
%
 
53,208

 
0.85
%
Alexandria City School Board
1
 
161
 
1.19
%
 
84,693

 
1.35
%
Cozen O'Connor
1
 
4
 
1.15
%
 
36,574

 
0.58
%
Total/Weighted Average
 
 
60
 
23.16
%
 
1,157,981

 
18.44
%


(1) The space leased to Squire Patton Boggs LLP is currently subleased to Advisory Board Company, who has signed an extension to make the lease coterminous with the remaining Advisory Board Company’s leases expiring on May 31, 2019







25



Industry Diversification
 
December 31, 2015
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
$
76,906,901

 
38.89
%
 
2,216,353

 
35.23
%
Credit Intermediation and Related Activities
17,867,989

 
9.03
%
 
317,519

 
5.05
%
Religious, Grantmaking, Civic, Professional, and Similar Organizations
11,424,003

 
5.78
%
 
299,432

 
4.76
%
Food Services and Drinking Places
8,210,261

 
4.15
%
 
255,951

 
4.07
%
Educational Services
6,438,571

 
3.26
%
 
218,111

 
3.47
%
Food and Beverage Stores
6,233,644

 
3.15
%
 
308,090

 
4.90
%
Ambulatory Health Care Services
5,954,282

 
3.01
%
 
182,926

 
2.91
%
Executive, Legislative, and Other General Government Support
5,551,343

 
2.81
%
 
155,883

 
2.48
%
Furniture and Home Furnishings Stores
4,494,167

 
2.27
%
 
217,571

 
3.46
%
Health and Personal Care Stores
4,160,071

 
2.10
%
 
108,985

 
1.73
%
Personal and Laundry Services
3,870,203

 
1.96
%
 
112,666

 
1.79
%
Securities, Commodity Contracts, and Other Financial Investments and Related Activities
3,846,316

 
1.94
%
 
105,972

 
1.68
%
Electronics and Appliance Stores
3,388,680

 
1.71
%
 
174,994

 
2.78
%
Administrative and Support Services
3,118,928

 
1.58
%
 
89,195

 
1.42
%
Broadcasting (except Internet)
3,000,437

 
1.52
%
 
70,672

 
1.12
%
Miscellaneous Store Retailers
2,877,394

 
1.45
%
 
149,667

 
2.38
%
Sporting Goods, Hobby, Book, and Music Stores
2,873,165

 
1.45
%
 
172,875

 
2.75
%
Publishing Industries (except Internet)
2,794,372

 
1.41
%
 
78,475

 
1.25
%
Telecommunications
2,394,424

 
1.21
%
 
57,603

 
0.92
%
Amusement, Gambling, and Recreation Industries
2,347,082

 
1.19
%
 
115,580

 
1.84
%
Clothing and Clothing Accessories Stores
1,985,855

 
1.00
%
 
103,610

 
1.65
%
General Merchandise Stores
1,897,690

 
0.96
%
 
223,915

 
3.56
%
Nursing and Residential Care Facilities
1,888,051

 
0.95
%
 
66,810

 
1.06
%
Real Estate
1,638,886

 
0.83
%
 
46,172

 
0.73
%
Social Assistance
1,236,567

 
0.63
%
 
48,146

 
0.77
%
Building Material and Garden Equipment and Supplies Dealers
1,173,193

 
0.59
%
 
38,330

 
0.61
%
Merchant Wholesalers, Durable Goods
964,905

 
0.49
%
 
25,720

 
0.41
%
Chemical Manufacturing
941,857

 
0.48
%
 
20,036

 
0.32
%
Insurance Carriers and Related Activities
817,364

 
0.41
%
 
25,324

 
0.40
%
Merchant Wholesalers, Nondurable Goods
774,612

 
0.39
%
 
48,208

 
0.77
%
Motor Vehicle and Parts Dealers
646,701

 
0.33
%
 
36,832

 
0.59
%
Construction of Buildings
630,323

 
0.32
%
 
19,451

 
0.31
%
Transportation Equipment Manufacturing
558,973

 
0.28
%
 
20,641

 
0.33
%
Other
4,864,370

 
2.47
%
 
160,199

 
2.50
%
Total
$
197,771,580

 
100.00
%
 
6,291,914

 
100.00
%

26



Lease Expirations
 
December 31, 2015
Year
 
Number of Leases
 
Rentable Square Feet
 
Percent of Rentable Square Feet
 
Annualized Rent (1)
 
Average Rental Rate
 
Percent of Annualized Rent (1)
Office:
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
102

 
429,087

 
9.48
%
 
$
17,127,845

 
$
39.92

 
9.36
%
2017
 
88

 
566,574

 
12.52
%
 
21,901,443

 
38.66

 
11.97
%
2018
 
92

 
461,318

 
10.20
%
 
17,293,222

 
37.49

 
9.45
%
2019
 
89

 
703,590

 
15.55
%
 
27,953,806

 
39.73

 
15.27
%
2020
 
83

 
558,369

 
12.34
%
 
23,937,123

 
42.87

 
13.08
%
2021 and thereafter
 
203

 
1,804,956

 
39.91
%
 
74,798,311

 
41.44

 
40.87
%
 
 
657

 
4,523,894

 
100.00
%
 
$
183,011,750

 
40.45

 
100.00
%
Retail:
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
21

 
96,231

 
4.44
%
 
$
2,915,521

 
$
30.30

 
5.57
%
2017
 
43

 
255,342

 
11.78
%
 
6,886,308

 
26.97

 
13.17
%
2018
 
37

 
334,958

 
15.45
%
 
4,875,855

 
14.56

 
9.32
%
2019
 
32

 
158,213

 
7.30
%
 
4,466,188

 
28.23

 
8.54
%
2020
 
37

 
407,969

 
18.82
%
 
7,363,213

 
18.05

 
14.08
%
2021 and thereafter
 
114

 
914,726

 
42.21
%
 
25,795,407

 
28.20

 
49.32
%
 
 
284

 
2,167,439

 
100.00
%
 
$
52,302,492

 
24.13

 
100.00
%
Total:
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
123

 
525,318

 
7.85
%
 
$
20,043,366

 
$
38.15

 
8.52
%
2017
 
131

 
821,916

 
12.28
%
 
28,787,751

 
35.03

 
12.23
%
2018
 
129

 
796,276

 
11.90
%
 
22,169,077

 
27.84

 
9.42
%
2019
 
121

 
861,803

 
12.88
%
 
32,419,994

 
37.62

 
13.78
%
2020
 
120

 
966,338

 
14.44
%
 
31,300,336

 
32.39

 
13.30
%
2021 and thereafter
 
317

 
2,719,682

 
40.65
%
 
100,593,718

 
36.99

 
42.75
%
 
 
941

 
6,691,333

 
100.00
%
 
$
235,314,242

 
35.17

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

27



Schedule of Properties
 
December 31, 2015
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET(1)
Office Buildings
 
 
 
 
 
 
 
 
515 King Street
 
Alexandria, VA
 
1992
 
1966
 
75,000

Courthouse Square
 
Alexandria, VA
 
2000
 
1979
 
116,000

Braddock Metro Center
 
Alexandria, VA
 
2011
 
1985
 
350,000

1600 Wilson Boulevard
 
Arlington, VA
 
1997
 
1973
 
168,000

Fairgate at Ballston
 
Arlington, VA
 
2012
 
1988
 
143,000

Monument II
 
Herndon, VA
 
2007
 
2000
 
208,000

925 Corporate Drive
 
Stafford, VA
 
2010
 
2007
 
134,000

1000 Corporate Drive
 
Stafford, VA
 
2010
 
2009
 
136,000

Silverline Center
 
Tysons, VA
 
1997
 
1972/1986/1999/2014
 
531,000

John Marshall II
 
Tysons, VA
 
2011
 
1996/2010
 
223,000

51 Monroe Street
 
Rockville, MD
 
1979
 
1975
 
224,000

6110 Executive Boulevard
 
Rockville, MD
 
1995
 
1971
 
203,000

600 Jefferson Plaza
 
Rockville, MD
 
1999
 
1985
 
113,000

One Central Plaza
 
Rockville, MD
 
2001
 
1974
 
267,000

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

Wayne Plaza
 
Silver Spring, MD
 
2000
 
1970
 
99,000

1901 Pennsylvania Avenue
 
Washington, DC
 
1977
 
1960
 
101,000

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

1776 G Street
 
Washington, DC
 
2003
 
1979
 
265,000

2000 M Street
 
Washington, DC
 
2007
 
1971
 
231,000

2445 M Street
 
Washington, DC
 
2008
 
1986
 
290,000

1140 Connecticut Avenue
 
Washington, DC
 
2011
 
1966
 
183,000

1227 25th Street
 
Washington, DC
 
2011
 
1988
 
135,000

Army Navy Club Building
 
Washington, DC
 
2014
 
1912/1987
 
108,000

1775 Eye Street, NW
 
Washington, DC
 
2014
 
1964
 
185,000

Subtotal
 
 
 
 
 
 
 
4,869,000




28


Schedule of Properties
 
December 31, 2015
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET (1)
Retail Centers
 
 
 
 
 
 
 
 
Bradlee Shopping Center
 
Alexandria, VA
 
1984
 
1955
 
171,000

Shoppes of Foxchase
 
Alexandria, VA
 
1994
 
1960/2006
 
134,000

800 S. Washington Street
 
Alexandria, VA
 
1998/2003
 
1955/1959
 
46,000

Concord Centre
 
Springfield, VA
 
1973
 
1960
 
76,000

Gateway Overlook
 
Columbia, MD
 
2010
 
2007
 
220,000

Frederick County Square
 
Frederick, MD
 
1995
 
1973
 
227,000

Frederick Crossing
 
Frederick, MD
 
2005
 
1999/2003
 
295,000

Centre at Hagerstown
 
Hagerstown, MD
 
2002
 
2000
 
332,000

Olney Village Center
 
Olney, MD
 
2011
 
1979/2003
 
199,000

Randolph Shopping Center
 
Rockville, MD
 
2006
 
1972
 
84,000

Montrose Shopping Center
 
Rockville, MD
 
2006
 
1970
 
145,000

Takoma Park
 
Takoma Park, MD
 
1963
 
1962
 
51,000

Westminster
 
Westminster, MD
 
1972
 
1969
 
150,000

Wheaton Park
 
Wheaton, MD
 
1977
 
1967
 
74,000

Chevy Chase Metro Plaza
 
Washington, DC
 
1985
 
1975
 
50,000

Spring Valley Retail Center
 
Washington, DC
 
2014
 
1941/1950
 
75,000

Subtotal
 
 
 
 
 
 
 
2,329,000



29


Schedule of Properties
 
December 31, 2015
 PROPERTIES
 
 LOCATION
 
 YEAR ACQUIRED
 
 YEAR CONSTRUCTED
 
 NET RENTABLE SQUARE FEET (1)
Multifamily Buildings / # units
 
 
 
 
 
 
 
 
Clayborne / 74
 
Alexandria, VA
 
2008
 
2008
 
60,000

Park Adams / 200
 
Arlington, VA
 
1969
 
1959
 
173,000

Bennett Park / 224
 
Arlington, VA
 
2007
 
2007
 
214,000

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

The Maxwell / 163
 
Arlington, VA
 
2014
 
2014
 
139,000

The Wellington / 711
 
Arlington, VA
 
2015
 
1960
 
842,000

Roosevelt Towers / 191
 
Falls Church, VA
 
1965
 
1964
 
170,000

The Ashby at McLean / 256
 
McLean, VA
 
1996
 
1982
 
274,000

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

Walker House Apartments / 212
 
Gaithersburg, MD
 
1996
 
1971/2003
 
157,000

3801 Connecticut Avenue / 307
 
Washington, DC
 
1963
 
1951
 
178,000

Kenmore Apartments / 374
 
Washington, DC
 
2008
 
1948
 
268,000

Yale West / 216
 
Washington, DC
 
2014
 
2011
 
173,000

Subtotal (3,258 units)
 
 
 
 
 
 
 
3,014,000

TOTAL
 
 
 
 
 
 
 
10,212,000

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


30



Supplemental Definitions

 
December 31, 2015
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, severance expense, relocation expense, acquisition and structuring expenses 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, severance expense, relocation expense, acquisition and structuring expenses 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.
NAREIT Funds from operations ("NAREIT 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 NAREIT 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 NAREIT FFO more accurately provides investors an indication of our ability to incur and service debt, make capital expenditures and fund other needs. NAREIT FFO is a non-GAAP measure.
Core Funds From Operations ("Core FFO") is calculated by adjusting NAREIT 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) expenses related to acquisition and structuring activities, (3) executive transition costs and severance expense related to corporate reorganization and related to executive retirements or resignations, (4) property impairments and gains or losses on sale, not already excluded from NAREIT FFO, as appropriate, and (5) relocation expense. 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 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 NAREIT FFO (1) recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream (excluding items contemplated prior to acquisition or associated with development / redevelopment of a property) 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 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) non-share-based severance expense related to corporate reorganization and related to executive retirements or resignations, (4) property impairments and gains or losses on sale, not already excluded from FAD, as appropriate, and (5) relocation expense. 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 Washington REIT’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.

31


Net Operating Income (“NOI”) is a non-GAAP measure defined as real estate rental revenue less real estate expenses. 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, real estate impairment and gain or loss on extinguishment of debt. We also present NOI on a cash basis ("Cash NOI") which is calculated as NOI less the impact of straightlining of rent and amortization of market intangibles. 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.
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.



32