washingtonreit300dpia18.jpg
 
NEWS RELEASE
CONTACT:
 
1775 Eye Street, NW, Suite 1000
Tejal R. Engman
Washington, DC 20006
Director of Investor Relations
Tel 202-774-3200
E-Mail: tengman@washreit.com
Fax 301-984-9610
 
www.washreit.com
 
 
 
 
February 16, 2017
 
 
 
WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES FINANCIAL AND OPERATING RESULTS FOR 2016
Washington REIT (Washington Real Estate Investment Trust - NYSE: WRE), a leading owner and operator of diversified properties in the Washington, DC region, reported financial and operating results today for the quarter and year-ended December 31, 2016:

Full Year and Fourth Quarter 2016 Highlights

•
Reported net income attributable to the controlling interests of $119.3 million for the year, or $1.65 per diluted share, compared to $89.7 million, or $1.31 per diluted share, in 2015
•
Reported net income attributable to the controlling interests of $5.4 million for the quarter, or $0.07 per diluted share, compared to $62.1 million, or $0.91 per diluted share, in the same period one year ago
•
Reported NAREIT Funds from Operations (FFO) of $126.0 million for the year, or $1.74 per diluted share, compared to $108.5 million, or $1.58 per diluted share in 2015
•
Reported Core FFO of $1.76 per diluted share for the year, a $0.05 increase over Core FFO of $1.71 per diluted share in 2015
•
Reported Core FFO of $0.43 per diluted share for the quarter, a $0.03 decrease over Core FFO of $0.46 per diluted share in the same period one year ago
•
Achieved same-store Net Operating Income (NOI) growth of 1.2% for the year, with same-store rental growth of 1.6% over 2015
•
Improved overall portfolio physical occupancy to 93.5%, 330 basis points higher than year-end 2015, and 30 basis points higher than at September 30, 2016
•
Executed the sale of the suburban Maryland office portfolio, totaling approximately 1.2 million square feet, for $240.0 million
•
Acquired Riverside Apartments, a 1,222 unit apartment community in Alexandria,VA, for $244.8 million
•
Reduced secured debt by $270 million during the year, thereby lowering leverage and strengthening the balance sheet

"2016 was a transformational year for Washington REIT," said Paul T. McDermott, President and Chief Executive Officer. "We sold our suburban Maryland office portfolio, allocated capital into value-add, metro-centric multifamily and further reduced our debt, thereby elevating the quality of our portfolio, strengthening our balance sheet, and improving our risk-adjusted growth profile. Today, Washington REIT projects strong 2017 same-store NOI growth, a multi-year value-creation pipeline, and a solid balance sheet, all of which will enable us to continue to capitalize on key growth opportunities in our region."

Financial Results

Net income attributable to the controlling interests for the year-ended December 31, 2016 was $119.3 million, or $1.65 per diluted share, compared to $89.7 million, or $1.31 per diluted share, in 2015.
 
Net income attributable to the controlling interests for the quarter-ended December 31, 2016 was $5.4 million, or $0.07 per diluted share, compared to $62.1 million, or $0.91 per diluted share, in the same period one year ago.

Core Funds from Operations(1), was $1.76 per diluted share for the year and $0.43 per diluted share for the quarter-ended December 31, 2016, as compared to $1.71 per diluted share and $0.46 per diluted share, respectively, for the


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corresponding periods in 2015.

FFO as defined by NAREIT for the year-ended December 31, 2016 was $126.0 million, or $1.74 per diluted share, compared to $108.5 million, or $1.58 per diluted share, in 2015. FFO for the quarter-ended December 31, 2016 was $31.7 million, or $0.42 per diluted share, compared to $31.5 million, or $0.46 per diluted share, in the same period one year ago.

2016 Operating Results

The Company's overall portfolio NOI(2) for 2016 was $198.3 million, compared to $194.2 million in 2015. Overall portfolio physical occupancy as of year end was 93.5%, compared to 90.2% as of year-end 2015.

Same-store(3) portfolio NOI increased by 1.2% for the year, while cash NOI increased by 0.9% compared to 2015. Same-store rental growth for the year was 1.6%. Same-store portfolio physical occupancy as of year end was 94.3%, compared to 92.1% as of year-end 2015.

▪
Office: 51% of Total NOI - Office properties' same-store NOI increased by 1.4% for the year and cash NOI increased by 0.8% compared to the same period one year ago. Rental rates increased 1.8% and same-store physical occupancy as of year-end 2016 increased 110 basis points to 92.1% over year-end 2015.

▪
Retail: 23% of Total NOI - Retail properties' same-store NOI decreased by 0.1% for the year and cash NOI decreased by 0.3% compared to the same period one year ago, primarily due to two long-term leases not commencing until third-quarter 2016. Rental rates increased 2.3% and same-store physical occupancy as of year-end 2016 increased 420 basis points to 95.7% over year-end 2015.

▪
Multifamily: 26% of Total NOI - Multifamily properties' same-store NOI increased by 2.7% for the year and cash NOI for the year increased by 3.0% compared to the same period one year ago. Rental rates increased 0.3% while same-store physical occupancy increased 170 basis points to 96.0% as of year-end 2016 compared to year-end 2015.

Fourth Quarter 2016 Operating Results

The Company's overall portfolio NOI for the fourth quarter was $48.0 million, compared to $51.4 million in the same period one year ago and $50.6 million in the third quarter of 2016.

Same-store portfolio NOI for the fourth quarter decreased by 1.3% while cash NOI decreased by 0.9% compared to the same period one year ago. Same-store rental growth for the fourth quarter was 1.4%.

▪
Office: 48% of Total NOI - Office properties' same-store NOI for the fourth quarter decreased by 1.5% and cash NOI decreased by 2.2% compared to the same period one year ago due to decreased lease termination fees and increased operating expenses, partly driven by higher repairs and maintenance, real estate taxes, and marketing expenses. Rental rates increased 2.0%.

▪
Retail: 24% of Total NOI - Retail properties' same-store NOI for the fourth quarter decreased by 2.5% and cash NOI for the fourth quarter decreased by 1.0% compared to the same period one year ago, due to increased operating expenses, partly driven by increased bad debt expense including one tenant bankruptcy as well as higher real estate taxes. Rental rates increased 0.9%.

▪
Multifamily: 28% of Total NOI - Multifamily properties' same-store NOI for the fourth quarter increased by 1.0% and cash NOI increased by 2.3% compared to the same period one year ago, impacted by a restaurant bankruptcy at one of our properties. Rental rates increased 0.8%.



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Full-Year and Fourth Quarter 2016 Leasing Activity

During full-year 2016, Washington REIT signed new and renewal commercial leases as follows (all dollar amounts are on a per square foot basis):
 
Square Feet
Weighted Average Term
(in years)
Weighted Average Free Rent Period
(in months)
Weighted Average Rental Rates
Weighted Average Rental Rate
% Increase
Tenant Improvements
Leasing Commissions
Office
581,000

5.7

5.3

$
41.67

13.2
%
$
29.69

$
11.54

Retail
207,000

6.4

1.2

31.32

19.4
%
6.32

5.57

Total
788,000

5.9

4.4

38.96

14.5
%
23.57

9.98


During the fourth quarter, Washington REIT signed commercial leases totaling 180,000 square feet, including 49,000 square feet of new leases and 131,000 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 Free Rent Period
(in months)
Weighted Average Rental Rates
Weighted Average Rental Rate
% Increase
Tenant Improvements
Leasing Commissions
New:
 
 
 
 
 
 
 
Office
39,000

4.9

3.0

$
42.64

5.7
%
$
31.88

$
10.88

Retail
10,000

9.2

1.0

44.14

15.4
%
29.72

20.48

Total
49,000

5.8

2.5

42.96

7.6
%
31.43

12.89

 
 
 
 
 
 
 
 
Renewal:
 
 
 
 
 
 
 
Office
65,000

4.9

3.1

$
46.84

8.1
%
$
16.45

$
11.33

Retail
66,000

4.9

—

30.27

10.0
%
0.86

1.83

Total
131,000

4.9

1.8

38.49

8.9
%
8.60

6.54


Capital Update

In December 2016 and January 2017, Washington REIT refinanced pre-payable and maturing secured debt by drawing $100.0 million and $50.0 million respectively on the seven-year $150.0 million unsecured term loan that the Company had entered into in July 2016, which is scheduled to mature on July 21, 2023. Washington REIT entered into a forward swap from floating interest rates to a 2.86% all-in fixed interest rate for $150.0 million commencing on March 31, 2017.

Earnings Guidance

2017 Core FFO guidance is expected to range from $1.74 to $1.82 per fully diluted share. The following assumptions are included in this guidance:

•
Same-store NOI growth is projected to range from 4.75% to 5.25%
•
Same-store office NOI growth is projected to range from 7.0% to 7.5%
•
Same-store retail NOI growth is projected to range from 3.0% to 3.5%
•
Same-store multifamily NOI growth is now projected to range from 2.5% to 3.0%
•
General and administrative expense is projected to be approximately $19.0 to $20.0 million
•
Interest expense is projected to be approximately $46.0 to $47.0 million
•
Non same-store office NOI is projected to range between $9.0 to $10.0 million
•
Non same-store multifamily NOI is projected to range between $13.0 to $13.75 million

The company is not providing guidance related to acquisitions or dispositions at this time.

Non same-store properties in 2017 are Riverside Apartments, which is a multifamily asset acquired in 2016 and The Army Navy Building and Braddock Metro Center, which are office assets that are being repositioned in 2017.



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Washington REIT's 2017 Core FFO guidance is based on a number of factors, many of which are outside its control and all of which are subject to change. Washington REIT may change its guidance during the year as actual and anticipated results vary from these assumptions.

2017 Guidance Reconciliation Table

A reconciliation of projected net income attributable to the controlling interests per diluted share to projected Core FFO per diluted share for the year ending December 31, 2017 is as follows:
 
Low

High

Net income attributable to the controlling interests per diluted share(a)                                      
$
0.34

$
0.42

Real estate depreciation and amortization(a) 
1.40

1.40

NAREIT FFO per diluted share
1.74

1.82

Core adjustments
—

—

Core FFO per diluted share                                                                           
$
1.74

$
1.82


(a) Does not include any impact from potential acquisitions and dispositions during the year.

Dividends

On January 6, 2017, Washington REIT paid a quarterly dividend of $0.30 per share.

Washington REIT today announced its Board of Trustees has declared a quarterly dividend of $0.30 per share to be paid on March 31, 2017 to shareholders of record on March 15, 2017.

Conference Call Information

The Conference Call for year-end 2016 Earnings is scheduled for Friday, February 17, 2017 at 11:00 A.M. Eastern time. Conference Call access information is as follows:
 
USA Toll Free Number:        877-407-9205
International Toll Number:    201-689-8054
 
The instant replay of the Conference Call will be available until March 3, 2017 at 11:59 P.M. Eastern time. Instant replay access information is as follows:
 
USA Toll Free Number:        877-481-4010
International Toll Number:    919-882-2331
Conference ID:         10048
 
The live on-demand webcast of the Conference Call will be available on the Investor section of Washington REIT's website at www.washreit.com. Online playback of the webcast will be available for two weeks following the Conference Call.

About Washington REIT

Washington REIT is a self-administered equity real estate investment trust investing in income-producing properties in the greater Washington metro region. Washington REIT owns a diversified portfolio of 49 properties, totaling approximately 6 million square feet of commercial space and 4,480 multifamily units, and land held for development. These 49 properties consist of 19 office properties, 16 retail centers and 14 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's website at www.washreit.com or by contacting Investor Relations at (202) 774-3200.
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


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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, changes in general and local economic and real estate market conditions, the potential for federal government budget reductions, the risk of failure to complete contemplated acquisitions and dispositions, 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, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2015 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.

(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 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) 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, casualty gains, and gains or losses on sale not already excluded from 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 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, 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 straight-lining of rent and amortization of market intangibles. We provide each of NOI and cash NOI as a supplement to net income calculated in accordance with GAAP. As such, neither should be considered an alternative to net income as an indication of our operating performance. They are the primary performance measures 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”. Same-store properties include all 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. 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. 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 (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 performance 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.






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Physical Occupancy Levels by Same-Store Properties (i) and All Properties
 
Physical Occupancy
 
Same-Store Properties
 
All Properties
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
Multifamily
96.0
%
 
94.3
%
 
94.5
%
 
93.4
%
Office
92.1
%
 
91.0
%
 
91.1
%
 
87.6
%
Retail
95.7
%
 
91.5
%
 
95.7
%
 
91.5
%
 
 
 
 
 
 
 
 
Overall Portfolio
94.3
%
 
92.1
%
 
93.5
%
 
90.2
%

(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 Q4 2016 and Q4 2015, same-store properties exclude:

Acquisitions:
Multifamily - The Wellington and Riverside Apartments;
Development/Redevelopment:
Multifamily - The Maxwell
Office - Silverline Center and The Army Navy Building;
Sold properties classified as continuing operations:
Multifamily - Munson Hill Towers
Retail - Montgomery Village Shopping Center
Office - Dulles Station II, Maryland Office Portfolio - Wayne Plaza, 600 Jefferson Plaza, 6110 Executive Boulevard, West Gude, 51 Monroe Street and One Central Plaza








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 WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
Quarter Ended 
 December 31,
 
Year Ended 
 December 31,
OPERATING RESULTS
2016
 
2015
 
2016
 
2015
Revenue
 
 
 
 
 
 
 
Real estate rental revenue
$
76,952

 
$
79,102

 
$
313,264

 
$
306,427

Expenses
 
 
 
 
 
 
 
Real estate expenses
28,940

 
27,688

 
115,013

 
112,234

Depreciation and amortization
26,302

 
28,808

 
108,406

 
108,935

Acquisition costs
—

 
119

 
1,178

 
2,056

Casualty (gain) and real estate impairment loss, net
—

 
—

 
(676
)
 
5,909

General and administrative
4,527

 
4,854

 
19,545

 
20,123

 
59,769

 
61,469

 
243,466

 
249,257

Other operating income
 
 
 
 
 
 
 
Gain on sale of real estate
—

 
59,376

 
101,704

 
91,107

Real estate operating income
17,183

 
77,009

 
171,502

 
148,277

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(11,773
)
 
(15,012
)
 
(53,126
)
 
(59,546
)
Other income
92

 
162

 
297

 
709

Loss on extinguishment of debt
—

 
—

 
—

 
(119
)
Income tax (expense) benefit
(76
)
 
(64
)
 
615

 
(134
)
 
(11,757
)
 
(14,914
)
 
(52,214
)
 
(59,090
)
 
 
 
 
 
 
 
 
Net income
5,426

 
62,095

 
119,288

 
89,187

Less: Net loss attributable to noncontrolling interests in subsidiaries
19

 
38

 
51

 
553

Net income attributable to the controlling interests
$
5,445

 
$
62,133

 
$
119,339

 
$
89,740

 
 
 
 
 
 
 
 
Income from continuing operations
$
5,426

 
$
62,095

 
$
119,288

 
$
89,187

Continuing operations real estate depreciation and amortization
26,302

 
28,808

 
108,406

 
108,935

Gain on sale of depreciable real estate
—

 
(59,376
)
 
(101,704
)
 
(89,653
)
NAREIT Funds from operations(1)
$
31,728

 
$
31,527

 
$
125,990

 
$
108,469

 
 
 
 
 
 
 
 
Non-cash loss on extinguishment of debt
—

 
—

 
—

 
119

Tenant improvements and leasing incentives
(4,822
)
 
(6,792
)
 
(18,893
)
 
(19,170
)
External and internal leasing commissions capitalized
(3,403
)
 
(2,426
)
 
(9,019
)
 
(6,895
)
Recurring capital improvements
(1,660
)
 
(3,296
)
 
(4,951
)
 
(6,048
)
Straight-line rents, net
(603
)
 
(533
)
 
(2,848
)
 
(1,344
)
Non-cash fair value interest expense
47

 
41

 
179

 
150

Non real estate depreciation & amortization of debt costs
873

 
980

 
3,545

 
3,979

Amortization of lease intangibles, net
900

 
925

 
3,594

 
3,576

Amortization and expensing of restricted share and unit compensation
737

 
1,123

 
3,398

 
5,007

Funds available for distribution(4)
$
23,797

 
$
21,549

 
$
100,995

 
$
87,843


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Quarter Ended 
 December 31,
 
Year Ended 
 December 31,
Per share data:
 
2016
 
2015
 
2016
 
2015
Net income attributable to the controlling interests
(Basic)
$
0.07

 
$
0.91

 
$
1.65

 
$
1.31

 
(Diluted)
$
0.07

 
$
0.91

 
$
1.65

 
$
1.31

NAREIT funds from operations
(Basic)
$
0.42

 
$
0.46

 
$
1.74

 
$
1.59

 
(Diluted)
$
0.42

 
$
0.46

 
$
1.74

 
$
1.58

 
 
 
 
 
 
 
 
 
Dividends declared
 
$
0.30

 
$
0.30

 
$
1.20

 
$
1.20

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
 
74,592

 
68,204

 
72,163

 
68,177

Fully diluted weighted average shares outstanding
 
74,779

 
68,371

 
72,339

 
68,310



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WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
December 31,
 
2016
 
2015
Assets
 
 
 
Land
$
573,315

 
$
561,256

Income producing property
2,112,088

 
2,076,541

 
2,685,403

 
2,637,797

Accumulated depreciation and amortization
(657,425
)
 
(692,608
)
Net income producing property
2,027,978

 
1,945,189

Properties under development or held for future development
40,232

 
36,094

Total real estate held for investment, net
2,068,210

 
1,981,283

Cash and cash equivalents
11,305

 
23,825

Restricted cash
6,317

 
13,383

Rents and other receivables, net of allowance for doubtful accounts of $2,377 and $2,297 respectively
64,319

 
62,890

Prepaid expenses and other assets
103,468

 
109,787

Total assets
$
2,253,619

 
$
2,191,168

 
 
 
 
Liabilities
 
 
 
Notes payable, net
$
843,084

 
$
743,181

Mortgage notes payable, net
148,540

 
418,052

Lines of credit
120,000

 
105,000

Accounts payable and other liabilities
46,967

 
45,367

Dividend Payable
22,414

 
20,434

Advance rents
11,750

 
12,744

Tenant security deposits
8,802

 
9,378

Total liabilities
1,201,557

 
1,354,156

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

 
—

Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 74,606 and 68,191 shares issued and outstanding, respectively
746

 
682

Additional paid-in capital
1,368,636

 
1,193,298

Distributions in excess of net income
(326,047
)
 
(357,781
)
Accumulated other comprehensive income (loss)
7,611

 
(550
)
Total shareholders' equity
1,050,946

 
835,649

Noncontrolling interests in subsidiaries
1,116

 
1,363

Total equity
1,052,062

 
837,012

Total liabilities and equity
$
2,253,619

 
$
2,191,168

 
 
 
 




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The following tables contain reconciliations of same-store net operating income to net income attributable to the controlling interests for the periods presented (in thousands):
 
 
 
 
 
 
 
 
Quarter Ended December 31, 2016
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
8,107

 
$
19,856

 
$
11,502

 
$
39,465

Add: Net operating income from non-same-store properties(3)
5,567

 
2,980

 
—

 
8,547

Total net operating income(2)
$
13,674

 
$
22,836

 
$
11,502

 
$
48,012

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
92

Interest expense
 
 
 
 
 
 
(11,773
)
Depreciation and amortization
 
 
 
 
 
 
(26,302
)
General and administrative expenses
 
 
 
 
 
 
(4,527
)
Income tax expense
 
 
 
 
 
 
(76
)
Net income
 
 
 
 
 
 
5,426

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
19

Net income attributable to the controlling interests
 
 
 
 
 
 
$
5,445

 
 
 
 
 
 
 
 
Quarter Ended December 31, 2015
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
8,029

 
$
20,154

 
$
11,792

 
$
39,975

Add: Net operating income from non-same-store properties(3)
2,608

 
8,338

 
493

 
11,439

Total net operating income(2)
$
10,637

 
$
28,492

 
$
12,285

 
$
51,414

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
162

Acquisition costs
 
 
 
 
 
 
(119
)
Interest expense
 
 
 
 
 
 
(15,012
)
Depreciation and amortization
 
 
 
 
 
 
(28,808
)
General and administrative expenses
 
 
 
 
 
 
(4,854
)
Income tax expense
 
 
 
 
 
 
(64
)
Gain on sale of real estate
 
 
 
 
 
 
59,376

Net income
 
 
 
 
 
 
62,095

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
38

Net income attributable to the controlling interests
 
 
 
 
 
 
$
62,133




Washington Real Estate Investment Trust
Page 11 of 12



The following tables contain reconciliations of same-store net operating income to net income attributable to the controlling interests for the periods presented (in thousands):
 
 
 
 
 
 
 
 
Year Ended December 31, 2016
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
32,691

 
$
78,647

 
$
45,706

 
$
157,044

Add: Net operating income from non-same-store properties(3)
18,325

 
22,882

 
—

 
41,207

Total net operating income(2)
$
51,016

 
$
101,529

 
$
45,706

 
$
198,251

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
297

Acquisition costs
 
 
 
 
 
 
(1,178
)
Interest expense
 
 
 
 
 
 
(53,126
)
Depreciation and amortization
 
 
 
 
 
 
(108,406
)
General and administrative expenses
 
 
 
 
 
 
(19,545
)
Income tax benefit
 
 
 
 
 
 
615

Gain on sale of real estate
 
 
 
 
 
 
101,704

Casualty gain and real estate impairment, net
 
 
 
 
 
 
676

Net income
 
 
 
 
 
 
119,288

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
51

Net income attributable to the controlling interests
 
 
 
 
 
 
$
119,339

 
 
 
 
 
 
 
 
Year Ended December 31, 2015
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
31,842

 
$
77,578

 
$
45,737

 
$
155,157

Add: Net operating income from non-same-store properties(3)
7,300

 
29,572

 
2,164

 
39,036

Total net operating income(2)
$
39,142

 
$
107,150

 
$
47,901

 
$
194,193

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
709

Acquisition costs
 
 
 
 
 
 
(2,056
)
Interest expense
 
 
 
 
 
 
(59,546
)
Depreciation and amortization
 
 
 
 
 
 
(108,935
)
General and administrative expenses
 
 
 
 
 
 
(20,123
)
Income tax expense
 
 
 
 
 
 
(134
)
Gain on sale of real estate
 
 
 
 
 
 
91,107

Loss on extinguishment of debt
 
 
 
 
 
 
(119
)
Real estate impairment
 
 
 
 
 
 
(5,909
)
Net income
 
 
 
 
 
 
89,187

Less: Net income attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
553

Net income attributable to the controlling interests
 
 
 
 
 
 
$
89,740



Washington Real Estate Investment Trust
Page 12 of 12



The following table contains a reconciliation of net income to core funds from operations for the periods presented (in thousands, except per share amounts):
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended 
 December 31,
 
Year Ended 
 December 31,
 
 
2016
 
2015
 
2016
 
2015
Net income
 
$
5,426

 
$
62,095

 
$
119,288

 
$
89,187

Add/(deduct):
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
 
26,302

 
28,808

 
108,406

 
108,935

Gain on sale of depreciable real estate
 
—

 
(59,376
)
 
(101,704
)
 
(89,653
)
NAREIT funds from operations(1)
 
31,728

 
31,527

 
125,990

 
108,469

Add/(deduct):
 
 
 
 
 
 
 
 
Loss on extinguishment of debt
 
—

 
—

 
—

 
119

Casualty (gain) and real estate impairment loss, net
 
—

 
—

 
(676
)
 
5,909

Gain on sale of non-depreciable real estate, net
 
—

 
—

 
—

 
(1,404
)
Severance expense
 
—

 
—

 
828

 
1,001

Relocation expense
 
—

 
—

 
16

 
90

Acquisition costs and structuring expense
 
118

 
189

 
1,521

 
2,721

 
 
 
 
 
 
 
 
 
Core funds from operations(1)
 
$
31,846

 
$
31,716

 
$
127,679

 
$
116,905

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended 
 December 31,
 
Year Ended 
 December 31,
Per share data:
 
2016
 
2015
 
2016
 
2015
NAREIT FFO
(Basic)
$
0.42

 
$
0.46

 
$
1.74

 
$
1.59

 
(Diluted)
$
0.42

 
$
0.46

 
$
1.74

 
$
1.58

Core FFO
(Basic)
$
0.43

 
$
0.46

 
$
1.77

 
$
1.71

 
(Diluted)
$
0.43

 
$
0.46

 
$
1.76

 
$
1.71

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding - basic
 
74,592

 
68,204

 
72,163

 
68,177

Fully diluted weighted average shares outstanding
 
74,779

 
68,371

 
72,339

 
68,310