washingtonreit300dpia25.jpg
 
NEWS RELEASE
CONTACT:
 
1775 Eye Street, NW, Suite 1000
Tejal R. Engman
Washington, DC 20006
Vice President, Investor Relations
Tel 202-774-3200
E-Mail: tengman@washreit.com
Fax 301-984-9610
 
www.washreit.com
 
 
 
 
July 27, 2017
 
 
 
WASHINGTON REAL ESTATE INVESTMENT TRUST ANNOUNCES SECOND QUARTER FINANCIAL AND OPERATING RESULTS AND QUARTERLY DIVIDEND

Washington Real Estate Investment Trust (“Washington REIT” or the “Company”) (NYSE: WRE), a leading owner and operator of commercial and multifamily properties in the Washington, DC area, reported financial and operating results today for the quarter ended June 30, 2017:

Second Quarter 2017 Highlights

Net income attributable to controlling interests was $7.9 million, or $0.10 per diluted share, compared to $31.8 million, or $0.44 per diluted share in the second quarter of 2016, which included the recognition of a $24.1 million gain from the first sale transaction of the suburban Maryland office portfolio. NAREIT Funds from Operations (FFO) was $37.1 million, or $0.48 per diluted share, compared to $32.9 million, or $0.46 per diluted share, in second quarter 2016. Additional highlights are as below:

Reported Core FFO of $0.48 per diluted share, compared to $0.46 per diluted share in second quarter 2016
Grew same-store Net Operating Income (NOI) by 8.8% year-over-year
Grew same-store NOI by 14.8% for the office, 4.6% for the retail and 2.6% for the multifamily portfolios year-over-year
Increased same-store economic occupancy by 470 basis points year-over-year to 93.7%
Raised the mid-point of 2017 Core FFO guidance by two cents per fully diluted share and tightened 2017 Core FFO guidance to a range of $1.80 to $1.84 from $1.76 to $1.84 per fully diluted share
Raised 2017 same-store NOI growth assumption to range from 5.75% to 6.25% year-over-year, driven by increased office, retail and multifamily same-store NOI year-over-year growth assumptions
Signed a 131,000 square foot, 15-year lease with the United States Department of Agriculture (USDA) at Braddock Metro Center in Alexandria, VA
Completed the acquisition of Watergate 600, a 289,000 square foot office building in Washington, DC for $135.0 million

"Washington REIT has delivered strong second-quarter and first half 2017 results. We achieved 9.6% year-over-year same-store NOI growth in the first half of the year, raised our 2017 same-store NOI growth assumptions across all three asset classes, raised our 2017 Core FFO guidance for the second time this year, acquired an iconic DC office asset with strong NAV growth potential, and signed a significant new office lease, thereby addressing all our large, near-term office lease expirations," said Paul T. McDermott, President and Chief Executive Officer. "Our positive momentum is driven by our research-based capital allocation, which has strategically positioned us to capitalize on attractive value-add growth opportunities in the Washington metro region and to generate strong risk-adjusted returns for our shareholders."

Operating Results

The Company's overall portfolio NOI(2) was $54.8 million for the quarter ended June 30, 2017, compared to $51.2 million in the corresponding prior year period. Overall portfolio ending occupancy(5) for the second quarter was at 93.4%, compared to 91.1% at the end of the second quarter last year and 93.5% at the end of first quarter 2017.




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Same-store(3) portfolio ending occupancy for the second quarter of 2017 was 93.3%, compared to 90.8% at June 30, 2016 and 93.7% at the end of first quarter 2017. Same-store portfolio NOI for the second quarter increased by 8.8%, compared to the corresponding prior year period.
 
Office: 51% of Total NOI - Same-store NOI increased by 14.8% compared to the corresponding prior year period, primarily due to 870 basis points of economic occupancy(6) gains driven by lease commencements, of which approximately 60% occurred at the recently redeveloped Silverline Center with the rest spread across the same-store office portfolio. Periodic settlements of tenant recoveries were also higher. Same-store ending occupancy increased by 610 basis points year-over-year and declined by 10 basis points sequentially to 93.0% primarily due to a tenant move-out that has been re-leased to a cyber security tenant expected to commence in the third quarter. The office portfolio was 94% leased at the end of the second quarter.

Retail: 22% of Total NOI - Same-store NOI increased 4.6% compared to the corresponding prior year period, primarily due to 110 basis points of economic occupancy gains driven by lease commencements, as well as lower bad debt expense and lower utilities due to milder weather. Same-store ending occupancy decreased by 70 basis points year-over-year to 91.4%, and by 240 basis points sequentially, primarily due to the previously announced HHGregg bankruptcy as well as the move-out of a large commodity retailer, which has been backfilled by a supermarket chain whose lease commenced in the third quarter. The retail portfolio was 93% leased at the end of the second quarter.

Multifamily: 27% of Total NOI - Same-store NOI increased by 2.6% compared to the corresponding prior year period, driven by 180 basis points of rental growth. Same-store effective new lease rent trade-outs increased by 5.6% and same store effective renewal rent trade-outs increased by 3.3% year-over-year. Same-store ending occupancy on a unit basis increased by 80 basis points year-over-year and 60 basis points sequentially to 95.4%. The multifamily portfolio was 98% leased at the end of the second quarter.

Leasing Activity

During the second quarter, Washington REIT signed commercial leases totaling 367,000 square feet, including 228,000 square feet of new leases and 139,000 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
192,000

11.7

12.5

$
31.14

(14.2
)%
$
61.00

$
16.96

Retail
36,000

11.6

6.9

36.28

66.4
 %
54.06

17.44

Total
228,000

11.7

11.6

31.92

(6.5
)%
59.91

17.04

 
 
 
 
 
 
 
 
Renewal:
 
 
 
 
 
 
 
Office
22,000

6.5

3.0

$
58.15

14.8
 %
$
12.71

$
8.94

Retail
117,000

5.0


23.43

11.1
 %
0.20

0.51

Total
139,000

5.3

0.9

28.94

12.2
 %
2.18

1.85


Included in the new office leasing during the quarter, is a 131,000 square foot, 15-year lease with the USDA to backfill the space being vacated by Engility at Braddock Metro Center in Alexandria, VA, an asset that is being redeveloped.

Subsequent to quarter-end, the recently redeveloped Army Navy Building in Washington, DC, leased approximately 17,000 square feet and is now 71% leased.








Washington Real Estate Investment Trust
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Acquisition Activity

On April 4, 2017, Washington REIT completed the acquisition of Watergate 600, a 289,000 square foot iconic office building on the Potomac riverfront in Washington, DC for $135.0 million in a transaction that was structured to include the issuance of operating partnership units for a portion of the purchase price.
Capital Update

Year-to-date, the Company issued 2,070,000 shares at an average price of $31.44 per share through the Company’s At-the-Market (ATM) program, raising gross proceeds of $65.1 million to maintain balance sheet strength.

Earnings Guidance

Management is raising the mid-point of 2017 Core FFO guidance by two cents per fully diluted share and tightening 2017 Core FFO guidance to a range of $1.80 to $1.84 from $1.76 to $1.84 per fully diluted share. The following assumptions are incorporated into the tightened guidance range:

Same-store NOI growth is raised to a projected range of 5.75% to 6.25%, from a previous range of 4.75% to 5.25%
Same-store office NOI growth is raised to a projected range of 9.0% to 9.5%, from a previous range of 7.25% to 7.75%
Same-store retail NOI growth is raised to a projected range of 2.5% to 3.0%, from a previous range of 2.0% to 2.5%
Same-store multifamily NOI growth is raised to a projected range of 3.0% to 3.5%, from a previous range of 2.5% to 3.0%
The Company's acquisition assumptions currently reflect Watergate 600, although it continues to seek further value-add opportunities
The Company assumes dispositions of assets ranging from $70 to $100 million, including Walker House, a multifamily asset located in Gaithersburg, MD
Interest expense is now projected to be approximately $47.5 to $48.0 million considering the acquisition of Watergate 600 and the anticipated timing of the assumed dispositions
General and administrative expense is now projected to range from $22.0 to $22.5 million
Non same-store office NOI, which includes Watergate 600, is now projected to range between $18.5 to $19.5 million
Non same-store multifamily NOI is now projected to range between $13.0 to $13.5 million

Non same-store properties in 2017 consist of Riverside Apartments, a multifamily asset acquired in 2016, The Army Navy Building and Braddock Metro Center, two office assets that are being repositioned in 2017, and Watergate 600, an office asset that was acquired in the second quarter of 2017.

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)  

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                                        
$
0.31

$
0.35

Real estate depreciation and amortization  
1.49

1.49

NAREIT FFO per diluted share
1.80

1.84

Core adjustments


Core FFO per diluted share                                                                           
$
1.80

$
1.84

(a) Does not include gains or losses on sales of assets as these will be added as known and incurred. The only assumed asset purchase is the recently-closed acquisition of Watergate 600 in Washington, DC.



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Dividends

On June 30, 2017, Washington REIT paid a quarterly dividend of $0.30 per share.

Washington REIT announced today that its Board of Trustees has declared a quarterly dividend of $0.30 per share to be paid on September 30, 2017 to shareholders of record on September 15, 2017.

Conference Call Information

The Conference Call for Second Quarter Earnings is scheduled for Friday, July 28, 2017 at 11:00 A.M. Eastern Time. Conference Call access information is as follows:

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

The instant replay of the Conference Call will be available until Friday, August 11, 2017, at 11:59 P.M. Eastern Time. Instant replay access information is as follows:

USA Toll Free Number:            1-877-481-4010
International Toll Number:        1-919-882-2331
Conference ID:                10050

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. On-line playback of the webcast will be available for two weeks following the Conference Call.

About Washington REIT

Washington REIT is a self-administered, equity real estate investment trust investing in income-producing properties in the greater Washington metro region. Washington REIT owns a diversified portfolio of 50 properties, totaling approximately 6.3 million square feet of commercial space and 4,480 multifamily units, and land held for development. These 50 properties consist of 20 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 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 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 2016 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



Washington Real Estate Investment Trust
Page 5 of 12

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.

(5) Ending Occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period.

(6) 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.


















Washington Real Estate Investment Trust
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Ending Occupancy Levels by Same-Store Properties (i) and All Properties
 
Ending Occupancy
 
Same-Store Properties
 
All Properties
 
2nd QTR
 
2nd QTR
 
2nd QTR
 
2nd QTR
Segment
2017
 
2016
 
2017
 
2016
Multifamily
95.1
%
 
94.2
%
 
94.9
%
 
94.4
%
Office
93.0
%
 
86.9
%
 
92.9
%
 
87.5
%
Retail
91.4
%
 
92.1
%
 
91.4
%
 
92.1
%
 
 
 
 
 
 
 
 
Overall Portfolio
93.3
%
 
90.8
%
 
93.4
%
 
91.1
%

(i) Same-Store properties include all stabilized properties that were owned for the entirety of 2017 and the prior year, and exclude properties under redevelopment or development and properties purchased or sold at any time during 2017 or the prior year. We define redevelopment properties as those for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan which has a current impact on operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. Properties under redevelopment or development are included with the non-same-store properties beginning in the period during which redevelopment or development activities commence. We consider properties to no longer be under redevelopment or development upon substantial completion of redevelopment or development activities, and the earlier of achieving 90% occupancy or two years after substantial completion. For Q2 2017 and Q2 2016, same-store properties exclude:

Office Acquisition: Watergate 600;
Multifamily Acquisition: Riverside Apartments; and
Office Redevelopment: The Army Navy Building and Braddock Metro Center.

Also excluded from same-store properties in Q2 2017 and Q2 2016 are:
Sold Properties:
Office: 6110 Executive Boulevard, Wayne Plaza, 600 Jefferson Plaza, West Gude Drive, 51 Monroe Street and One Central Plaza.




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 WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
OPERATING RESULTS
2017
 
2016
 
2017
 
2016
Revenue
 
 
 
 
 
 
 
Real estate rental revenue
$
83,456

 
$
79,405

 
$
160,957

 
$
156,542

Expenses
 
 
 
 
 
 
 
Real estate expenses
28,691

 
28,175

 
56,554

 
56,909

Depreciation and amortization
29,261

 
25,161

 
55,330

 
51,199

Acquisition costs

 
1,024

 

 
1,178

General and administrative
5,759

 
4,968

 
11,385

 
10,479

Casualty gain

 
(676
)
 

 
(676
)
 
63,711

 
58,652

 
123,269

 
119,089

Other operating income
 
 
 
 
 
 
 
     Gain on sale of real estate

 
24,112

 

 
24,112

Real estate operating income
19,745

 
44,865

 
37,688

 
61,565

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(12,053
)
 
(13,820
)
 
(23,458
)
 
(28,180
)
Other income
48

 
83

 
125

 
122

Income tax benefit
107

 
693

 
107

 
693

 
(11,898
)
 
(13,044
)
 
(23,226
)
 
(27,365
)
 
 
 
 
 
 
 
 
Net income
7,847

 
31,821

 
14,462

 
34,200

Less: Net loss attributable to noncontrolling interests in subsidiaries
17

 
15

 
36

 
20

Net income attributable to the controlling interests
$
7,864

 
$
31,836

 
$
14,498

 
$
34,220

 
 
 
 
 
 
 
 
Net income
7,847

 
31,821

 
14,462

 
34,200

Depreciation and amortization
29,261

 
25,161

 
55,330

 
51,199

Gain on sale of depreciable real estate

 
(24,112
)
 

 
(24,112
)
NAREIT funds from operations(1)
$
37,108

 
$
32,870

 
$
69,792

 
$
61,287

 
 
 
 
 
 
 
 
Tenant improvements and incentives
(2,630
)
 
(7,639
)
 
(8,572
)
 
(9,182
)
External and internal leasing commissions capitalized
(1,414
)
 
(3,350
)
 
(3,937
)
 
(4,365
)
Recurring capital improvements
(663
)
 
(1,237
)
 
(1,068
)
 
(2,145
)
Straight-line rents, net
(1,106
)
 
(880
)
 
(1,955
)
 
(1,563
)
Non-cash fair value interest expense
(224
)
 
44

 
(526
)
 
86

Non real estate depreciation & amortization of debt costs
815

 
876

 
1,714

 
1,826

Amortization of lease intangibles, net
585

 
853

 
1,435

 
1,796

Amortization and expensing of restricted share and unit compensation
1,186

 
850

 
2,316

 
2,369

Funds available for distribution(4)
$
33,657

 
$
22,387

 
$
59,199

 
$
50,109




Washington Real Estate Investment Trust
Page 8 of 12

 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Per share data:
 
2017
 
2016
 
2017
 
2016
Net income attributable to the controlling interests
(Basic)
$
0.10

 
$
0.44

 
$
0.19

 
$
0.49

 
(Diluted)
$
0.10

 
$
0.44

 
$
0.19

 
$
0.49

NAREIT funds from operations
(Basic)
$
0.48

 
$
0.46

 
$
0.92

 
$
0.87

 
(Diluted)
$
0.48

 
$
0.46

 
$
0.92

 
$
0.87

 
 
 
 
 
 
 
 
 
Dividends paid
 
$
0.30

 
$
0.30

 
$
0.60

 
$
0.60

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
76,705

 
71,719

 
75,785

 
70,010

Fully diluted weighted average shares outstanding
 
76,830

 
71,912

 
75,903

 
70,200

Fully diluted weighted average shares outstanding (for FFO)
76,830

 
71,912

 
75,903

 
70,200





Washington Real Estate Investment Trust
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WASHINGTON REAL ESTATE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
 
 
 
 
June 30, 2017
 
 
 
(unaudited)
 
December 31, 2016
Assets
 
 
 
Land
$
616,444

 
$
573,315

Income producing property
2,201,846

 
2,112,088

 
2,818,290

 
2,685,403

Accumulated depreciation and amortization
(691,515
)
 
(657,425
)
Net income producing property
2,126,775

 
2,027,978

Properties under development or held for future development
46,154

 
40,232

Total real estate held for investment, net
2,172,929

 
2,068,210

Investment in real estate held for sale, net
6,983

 

Cash and cash equivalents
13,237

 
11,305

Restricted cash
1,506

 
6,317

Rents and other receivables, net of allowance for doubtful accounts of $2,274 and $2,377, respectively
72,149

 
64,319

Prepaid expenses and other assets
121,005

 
103,468

Other assets related to properties sold or held for sale
303

 

Total assets
$
2,388,112

 
$
2,253,619

 
 
 
 
Liabilities
 
 
 
Notes payable
$
893,763

 
$
843,084

Mortgage notes payable
96,934

 
148,540

Lines of credit
228,000

 
120,000

Accounts payable and other liabilities
60,165

 
46,967

Dividend payable

 
22,414

Advance rents
11,956

 
11,750

Tenant security deposits
9,263

 
8,802

Liabilities related to properties sold or held for sale
322

 

Total liabilities
1,300,403

 
1,201,557

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

 

Shares of beneficial interest, $0.01 par value; 100,000 shares authorized; 76,926 and 74,606 shares issued and outstanding, respectively
769

 
746

Additional paid-in capital
1,435,994

 
1,368,636

Distributions in excess of net income
(357,308
)
 
(326,047
)
Accumulated other comprehensive loss
6,857

 
7,611

Total shareholders' equity
1,086,312

 
1,050,946

 
 
 
 
Noncontrolling interests in subsidiaries
1,397

 
1,116

Total equity
1,087,709

 
1,052,062

 
 
 
 
Total liabilities and equity
$
2,388,112

 
$
2,253,619






Washington Real Estate Investment Trust
Page 10 of 12

The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands):
 
 
 
 
 
 
 
 
Three months ended June 30, 2017
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
11,366

 
$
22,476

 
$
11,915

 
$
45,757

Add: Net operating income from non-same-store properties(3)
3,228

 
5,780

 

 
9,008

Total net operating income(2)
$
14,594

 
$
28,256

 
$
11,915

 
$
54,765

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
48

Interest expense
 
 
 
 
 
 
(12,053
)
Depreciation and amortization
 
 
 
 
 
 
(29,261
)
General and administrative expenses
 
 
 
 
 
 
(5,759
)
Income tax benefit
 
 
 
 
 
 
107

Net income
 
 
 
 
 
 
7,847

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
17

Net income attributable to the controlling interests
 
 
 
 
 
 
$
7,864

 
 
 
 
 
 
 
 
Three months ended June 30, 2016
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
11,074

 
$
19,582

 
$
11,396

 
$
42,052

Add: Net operating income from non-same-store properties(3)
1,617

 
7,561

 

 
9,178

Total net operating income(2)
$
12,691

 
$
27,143

 
$
11,396

 
$
51,230

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
83

Acquisition costs
 
 
 
 
 
 
(1,024
)
Interest expense
 
 
 
 
 
 
(13,820
)
Depreciation and amortization
 
 
 
 
 
 
(25,161
)
General and administrative expenses
 
 
 
 
 
 
(4,968
)
Gain on sale of real estate
 
 
 
 
 
 
24,112

Casualty gain
 
 
 
 
 
 
676

Income tax benefit
 
 
 
 
 
 
693

Net income
 
 
 
 
 
 
31,821

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
15

Net income attributable to the controlling interests
 
 
 
 
 
 
$
31,836







Washington Real Estate Investment Trust
Page 11 of 12

The following tables contain reconciliations of net income to same-store net operating income for the periods presented (in thousands):
 
 
 
 
 
 
 
 
Six months ended June 30, 2017
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
22,478

 
$
43,787

 
$
23,757

 
$
90,022

Add: Net operating income from non-same-store properties(3)
6,299

 
8,082

 

 
14,381

Total net operating income(2)
$
28,777

 
$
51,869

 
$
23,757

 
$
104,403

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
125

Interest expense
 
 
 
 
 
 
(23,458
)
Depreciation and amortization
 
 
 
 
 
 
(55,330
)
General and administrative expenses
 
 
 
 
 
 
(11,385
)
Income tax benefit
 
 
 
 
 
 
107

Net income
 
 
 
 
 
 
14,462

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
36

Net income attributable to the controlling interests
 
 
 
 
 
 
$
14,498

 
 
 
 
 
 
 
 
Six months ended June 30, 2016
Multifamily
 
Office
 
Retail
 
Total
Same-store net operating income(3)
$
21,760

 
$
38,025

 
$
22,370

 
$
82,155

Add: Net operating income from non-same-store properties(3)
1,617

 
15,861

 

 
17,478

Total net operating income(2)
$
23,377

 
$
53,886

 
$
22,370

 
$
99,633

Add/(deduct):
 
 
 
 
 
 
 
Other income
 
 
 
 
 
 
122

Acquisition costs
 
 
 
 
 
 
(1,178
)
Interest expense
 
 
 
 
 
 
(28,180
)
Depreciation and amortization
 
 
 
 
 
 
(51,199
)
General and administrative expenses
 
 
 
 
 
 
(10,479
)
Gain on sale of real estate
 
 
 
 
 
 
24,112

Casualty gain
 
 
 
 
 
 
676

Income tax benefit
 
 
 
 
 
 
693

Net income
 
 
 
 
 
 
34,200

Less: Net loss attributable to noncontrolling interests in subsidiaries
 
 
 
 
 
 
20

Net income attributable to the controlling interests
 
 
 
 
 
 
$
34,220





Washington Real Estate Investment Trust
Page 12 of 12

The following table contains a reconciliation of net income attributable to the controlling interests to core funds from operations for the periods presented (in thousands, except per share data):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Net income
 
$
7,847

 
$
31,821

 
$
14,462

 
$
34,200

Add/(deduct):
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
 
29,261

 
25,161

 
55,330

 
51,199

Gain on sale of depreciable real estate
 

 
(24,112
)
 

 
(24,112
)
NAREIT funds from operations(1)
 
37,108

 
32,870

 
69,792

 
61,287

Add/(deduct):
 
 
 
 
 
 
 
 
Casualty (gain)
 

 
(676
)
 

 
(676
)
Acquisition and structuring expenses
 
104

 
1,107

 
319

 
1,366

Severance expense
 

 
126

 

 
586

Core funds from operations(1)
 
$
37,212

 
$
33,427

 
$
70,111

 
$
62,563

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
Per share data:
 
2017
 
2016
 
2017
 
2016
NAREIT FFO
(Basic)
$
0.48

 
$
0.46

 
$
0.92

 
$
0.87

 
(Diluted)
$
0.48

 
$
0.46

 
$
0.92

 
$
0.87

Core FFO
(Basic)
$
0.48

 
$
0.46

 
$
0.92

 
$
0.89

 
(Diluted)
$
0.48

 
$
0.46

 
$
0.92

 
$
0.89

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
76,705

 
71,719

 
75,785

 
70,010

Fully diluted weighted average shares outstanding (for FFO)
 
76,830

 
71,912

 
75,903

 
70,200