washingtonreit300dpia23.jpg
 
 
 
 
 
Washington Real Estate Investment Trust
 
 
Fourth Quarter 2017
 
 
picture2.jpg
 
 
Supplemental Operating and Financial Data
 
 
Contact:
 
1775 Eye Street, NW
 
 
Tejal R. Engman
 
 Suite 1000
 
 
Vice President, Investor Relations
 
Washington, DC 20006
 
 
E-mail: tengman@washreit.com
 
(202) 774-3200
 
 
 
 
(301) 984-9610 fax
 
 
 
 
 
 
 
 





Company Background and Highlights
Fourth Quarter 2017
Washington Real Estate Investment Trust ("Washington REIT") is a self-administered equity real estate investment trust investing in income-producing properties in the greater Washington, DC region. Washington REIT has a diversified portfolio with investments in office, retail, and multifamily properties and land for development.

Full Year and Fourth Quarter 2017 Financial Results and Highlights
Net income attributable to controlling interests was $19.7 million, or $0.25 per diluted share, for the year, compared to $119.3 million, or $1.65 per diluted share, in 2016. Net income attributable to controlling interests was $2.3 million, or $0.03 per diluted share, for the fourth quarter, compared to $5.4 million, or $0.07 per diluted share, for the fourth quarter 2016. Additional results and highlights are reported as below:

NAREIT Funds from Operations (FFO)(1) of $141.0 million, or $1.83 per diluted share, for the year, compared to $126.0 million, or $1.74 per diluted share, in 2016
NAREIT FFO of $35.4 million, or $0.45 per diluted share, for the fourth quarter, compared to $31.7 million, or $0.42 per diluted share, in fourth quarter 2016
Core FFO of $1.82 per diluted share for the year, compared to $1.76 per diluted share in 2016
Core FFO of $0.44 per diluted share for the fourth quarter, compared to $0.43 per diluted share in fourth quarter 2016
Same-store Net Operating Income (NOI)(2) growth of 6.0% for the year
Same-store NOI growth of 2.3% in fourth quarter 2017 over fourth quarter 2016
Sold Walker House Apartments in Gaithersburg, MD for $32.2 million
Subsequent to quarter-end:
Purchased Arlington Tower in Arlington, VA for $250 million
Sold Braddock Metro Center in Alexandria, VA for approximately $79 million
Entered into an agreement to sell 2445 M Street in Washington, DC for approximately $100 million

Of the 93,000 square feet of commercial leases signed, there were 33,000 square feet of new leases and 60,000 square feet of renewal leases. New leases had an average rental rate increase of 15.3% over expiring lease rates and a weighted average lease term of 5.4 years. Commercial tenant improvement costs were $43.69 per square foot and leasing commissions were $11.93 per square foot for new leases. Renewal leases had an average rental rate increase of 2.4% from expiring lease rates and a weighted average lease term of 5.0 years. Commercial tenant improvement costs were $11.36 per square foot and leasing commissions were $5.65 per square foot for renewal leases.

On October 23, 2017, the Company completed the sale of Walker House Apartments, 212-unit, mid-rise multifamily asset in Gaithersburg, MD for $32.2 million dollars. On January 18, 2018 Washington REIT completed the purchase of Arlington Tower, a 398,000 square foot, Class A office building located in the heart of the Rosslyn submarket in Arlington, VA, for approximately $250 million dollars. On January 19, 2018, Washington REIT completed the sale of Braddock Metro Center, a 356,000 square foot office asset in Alexandria, VA, for approximately $79 million dollars. Subsequent to quarter-end, the Company entered into a definitive agreement to sell 2445 M Street, a 292,000 square foot office building in DC for approximately $100 million and expects to complete this transaction in September 2018.

As of December 31, 2017, Washington REIT owned a diversified portfolio of 49 properties, totaling approximately 6.4 million square feet of commercial space and 4,268 multifamily units, and land held for development. These 49 properties consist of 20 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 2017

Net Operating Income Contribution by Sector - Fourth Quarter 2017

a4q2017supplementpiechart.jpg




Certain statements in our earnings release and on our conference call, including with respect to the potential sale of 2445 M Street, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements in this earnings release preceded by, followed by or that include the words “believe,” “expect,” “intend,” “anticipate,” “potential,” “project,” “will” and other similar expressions. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. Such risks, uncertainties and other factors include, but are not limited to, the potential for federal government budget reductions, changes in general and local economic and real estate market conditions, the timing and pricing of lease transactions, the availability and cost of capital, fluctuations in interest rates, tenants' financial conditions, levels of competition, the effect of government regulation, the impact of newly adopted accounting principles, and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 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.





Supplemental Financial and Operating Data

Table of Contents
December 31, 2017
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 (Adjusted 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
 
Same-Store Portfolio Net Operating Income (NOI) Quarter Detail
 
Same-Store Portfolio Net Operating Income (NOI) Year-to-Date Detail
 
Net Operating Income (NOI) by Region
 
Same-Store Portfolio & Overall Ending Occupancy Levels by Sector
 
Same-Store Portfolio & Overall Average Occupancy Levels by Sector
Growth and Strategy
 
 
Acquisition and Disposition Summary
 
Development/Redevelopment Summary
Tenant Analysis
 
 
Multifamily Rental Rate Growth
 
Commercial Leasing Summary- New Leases
 
Commercial Leasing Summary- Renewal Leases
 
10 Largest Tenants - Based on Annualized Base 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
12/31/2017
 
12/31/2016
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Real estate rental revenue
$
325,078

 
$
313,264

 
$
81,302

 
$
82,819

 
$
83,456

 
$
77,501

 
$
76,952

Real estate expenses
(115,650
)
 
(115,013
)
 
(29,450
)
 
(29,646
)
 
(28,691
)
 
(27,863
)
 
(28,940
)
 
209,428

 
198,251

 
51,852

 
53,173

 
54,765

 
49,638

 
48,012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate depreciation and amortization
(112,056
)
 
(108,406
)
 
(28,785
)
 
(27,941
)
 
(29,261
)
 
(26,069
)
 
(26,302
)
Income from real estate
97,372

 
89,845

 
23,067

 
25,232

 
25,504

 
23,569

 
21,710

 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative expenses
(22,580
)
 
(19,545
)
 
(5,868
)
 
(5,327
)
 
(5,759
)
 
(5,626
)
 
(4,527
)
Real estate impairment (loss) and casualty gain, net
(33,152
)
 
676

 
(28,152
)
 
(5,000
)
 

 

 

Acquisition costs

 
(1,178
)
 

 

 

 

 

Interest expense
(47,534
)
 
(53,126
)
 
(11,900
)
 
(12,176
)
 
(12,053
)
 
(11,405
)
 
(11,773
)
Other income
507

 
297

 
298

 
84

 
48

 
77

 
92

Gain on sale of real estate
24,915

 
101,704

 
24,915

 

 

 

 

Income tax benefit (expense)
84

 
615

 
(23
)
 

 
107

 

 
(76
)
Net income
19,612

 
119,288

 
2,337

 
2,813

 
7,847

 
6,615

 
5,426

Less: Net loss attributable to noncontrolling interests
56

 
51

 

 
20

 
17

 
19

 
19

Net income attributable to the controlling interests
$
19,668

 
$
119,339

 
$
2,337

 
$
2,833

 
$
7,864

 
$
6,634

 
$
5,445

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to the controlling interests
$
0.25

 
$
1.65

 
$
0.03

 
$
0.04

 
$
0.10

 
$
0.09

 
$
0.07

Fully diluted weighted average shares outstanding
76,935

 
72,339

 
78,478

 
77,423

 
76,830

 
74,966

 
74,779

Percentage of Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate expenses
35.6
%
 
36.7
%
 
36.2
%
 
35.8
%
 
34.4
%
 
36.0
%
 
37.6
%
General and administrative expenses
6.9
%
 
6.2
%
 
7.2
%
 
6.4
%
 
6.9
%
 
7.3
%
 
5.9
%
Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA / Interest expense
4.0
x
 
3.4
x
 
3.9
x
 
4.0
x
 
4.1
x
 
3.9
x
 
3.7
x
Net income attributable to the controlling interest/Total real estate revenue
6.1
%
 
38.1
%
 
2.9
%
 
3.4
%
 
9.4
%
 
8.6
%
 
7.1
%
 
 
 

4




Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Assets
 
 
 
 
 
 
 
 
 
Land
$
588,025

 
$
615,280

 
$
616,444

 
$
573,315

 
$
573,315

Income producing property
2,113,977

 
2,214,864

 
2,201,846

 
2,123,807

 
2,112,088

 
2,702,002

 
2,830,144

 
2,818,290

 
2,697,122

 
2,685,403

Accumulated depreciation and amortization
(683,692
)
 
(715,228
)
 
(691,515
)
 
(680,231
)
 
(657,425
)
Net income producing property
2,018,310

 
2,114,916

 
2,126,775

 
2,016,891

 
2,027,978

Development in progress, including land held for development
54,422

 
49,065

 
46,154

 
42,914

 
40,232

Total real estate held for investment, net
2,072,732

 
2,163,981

 
2,172,929

 
2,059,805

 
2,068,210

Investment in real estate held for sale, net
68,534

 
7,011

 
6,983

 

 

Cash and cash equivalents
9,847

 
11,326

 
13,237

 
15,214

 
11,305

Restricted cash
2,776

 
1,442

 
1,506

 
1,430

 
6,317

Rents and other receivables, net of allowance for doubtful accounts
69,766

 
73,545

 
72,149

 
69,038

 
64,319

Prepaid expenses and other assets
125,087

 
126,589

 
121,005

 
108,622

 
103,468

Other assets related to properties sold or held for sale
10,684

 
400

 
303

 

 

Total assets
$
2,359,426

 
$
2,384,294

 
$
2,388,112

 
$
2,254,109

 
$
2,253,619

Liabilities
 
 
 
 
 
 
 
 
 
Notes payable
$
894,358

 
$
894,103

 
$
893,763

 
$
893,424

 
$
843,084

Mortgage notes payable, net
95,141

 
96,045

 
96,934

 
97,814

 
148,540

Lines of credit/short-term note payable
166,000

 
189,000

 
228,000

 
123,000

 
120,000

Accounts payable and other liabilities
61,565

 
66,393

 
60,165

 
50,684

 
46,967

Dividend payable
23,581

 

 

 

 
22,414

Advance rents
12,487

 
10,723

 
11,956

 
11,948

 
11,750

Tenant security deposits
9,149

 
9,528

 
9,263

 
9,002

 
8,802

Other liabilities related to properties sold or held for sale
1,809

 
311

 
322

 

 

Total liabilities
1,264,090

 
1,266,103

 
1,300,403

 
1,185,872

 
1,201,557

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

 

 

 

 

Shares of beneficial interest, $0.01 par value; 100,000 shares authorized
785

 
785

 
769

 
757

 
746

Additional paid-in capital
1,483,980

 
1,487,157

 
1,435,994

 
1,400,093

 
1,368,636

Distributions in excess of net income
(399,213
)
 
(377,968
)
 
(357,308
)
 
(342,020
)
 
(326,047
)
Accumulated other comprehensive loss
9,419

 
6,848

 
6,857

 
8,346

 
7,611

Total shareholders' equity
1,094,971

 
1,116,822

 
1,086,312

 
1,067,176

 
1,050,946

Noncontrolling interests in subsidiaries
365

 
1,369

 
1,397

 
1,061

 
1,116

Total equity
1,095,336

 
1,118,191

 
1,087,709

 
1,068,237

 
1,052,062

Total liabilities and equity
$
2,359,426

 
$
2,384,294

 
$
2,388,112

 
$
2,254,109

 
$
2,253,619


5




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

 
 
Twelve Months Ended
 
Three Months Ended
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Funds from operations (FFO)(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
19,612

 
$
119,288

 
$
2,337

 
$
2,813

 
$
7,847

 
$
6,615

 
$
5,426

Real estate depreciation and amortization
112,056

 
108,406

 
28,785

 
27,941

 
29,261

 
26,069

 
26,302

Gain on sale of depreciable real estate
(23,838
)
 
(101,704
)
 
(23,838
)
 

 

 

 

Real estate impairment
33,152

 

 
28,152

 
5,000

 

 

 

NAREIT funds from operations (FFO)
$
140,982

 
$
125,990

 
$
35,436

 
$
35,754

 
$
37,108

 
$
32,684

 
$
31,728

Casualty gain

 
(676
)
 

 

 

 

 

Gain on sale of non depreciable real estate
(1,077
)
 

 
(1,077
)
 

 

 

 

Severance expense

 
828

 

 

 

 

 

Relocation expense

 
16

 

 

 

 

 

Acquisition and structuring expenses
319

 
1,521

 

 

 
104

 
215

 
118

Core FFO (1)
$
140,224

 
$
127,679

 
$
34,359

 
$
35,754

 
$
37,212

 
$
32,899

 
$
31,846

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocation to participating securities(2)
$
(362
)
 
$
(310
)
 
$
(71
)
 
$
(107
)
 
$
(107
)
 
$
(78
)
 
$
(32
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FFO per share - basic
$
1.83

 
$
1.74

 
$
0.45

 
$
0.46

 
$
0.48

 
$
0.44

 
$
0.42

FFO per share - fully diluted
$
1.83

 
$
1.74

 
$
0.45

 
$
0.46

 
$
0.48

 
$
0.43

 
$
0.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core FFO per share - fully diluted
$
1.82

 
$
1.76

 
$
0.44

 
$
0.46

 
$
0.48

 
$
0.44

 
$
0.43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common dividend declared per share
$
1.20

 
$
1.20

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
$
0.30

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average shares - basic
76,820

 
72,163

 
78,386

 
77,291

 
76,705

 
74,854

 
74,592

Average shares - fully diluted
76,935

 
72,339

 
78,478

 
77,423

 
76,830

 
74,966

 
74,779

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  See "Supplemental Definitions" on page 33 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)
(Unaudited)

 

 
Twelve Months Ended
 
Three Months Ended
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Funds available for distribution (FAD)(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
NAREIT FFO
$
140,982

 
$
125,990

 
$
35,436

 
$
35,754

 
$
37,108

 
$
32,684

 
$
31,728

Tenant improvements and incentives
(18,182
)
 
(18,893
)
 
(7,788
)
 
(1,822
)
 
(2,630
)
 
(5,942
)
 
(4,822
)
External and internal leasing commissions
(7,405
)
 
(9,019
)
 
(1,741
)
 
(1,727
)
 
(1,414
)
 
(2,523
)
 
(3,403
)
Recurring capital improvements
(6,838
)
 
(4,951
)
 
(4,455
)
 
(1,315
)
 
(663
)
 
(405
)
 
(1,660
)
Straight-line rent, net
(4,380
)
 
(2,848
)
 
(1,238
)
 
(1,187
)
 
(1,106
)
 
(849
)
 
(603
)
Non-cash fair value interest expense
(970
)
 
179

 
(221
)
 
(223
)
 
(224
)
 
(302
)
 
47

Non-real estate depreciation and amortization of debt costs
3,537

 
3,545

 
943

 
880

 
815

 
899

 
873

Amortization of lease intangibles, net
2,431

 
3,594

 
436

 
560

 
585

 
850

 
900

Amortization and expensing of restricted share and unit compensation
4,772

 
3,398

 
1,211

 
1,245

 
1,186

 
1,130

 
737

Funds available for distribution (FAD)
$
113,947

 
$
100,995

 
$
22,583

 
$
32,165

 
$
33,657

 
$
25,542

 
$
23,797

Gain on sale of real estate, non depreciable assets
(1,077
)
 

 
(1,077
)
 

 

 

 

Non-share-based severance expense

 
407

 

 

 

 

 

Relocation expense

 
16

 

 

 

 

 

Acquisition and structuring expenses
319

 
1,521

 

 

 
104

 
215

 
118

Casualty gain

 
(676
)
 

 

 

 

 

Core FAD (1)
$
113,189

 
$
102,263

 
$
21,506

 
$
32,165

 
$
33,761

 
$
25,757

 
$
23,915

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  See "Supplemental Definitions" on page 33 of this supplemental for the definitions of FAD and Core FAD.
 
 
 
 


7




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

 
Twelve Months Ended
 
Three Months Ended
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Adjusted EBITDA(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
19,612

 
$
119,288

 
$
2,337

 
$
2,813

 
$
7,847

 
$
6,615

 
$
5,426

Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
47,534

 
53,126

 
11,900

 
12,176

 
12,053

 
11,405

 
11,773

Real estate depreciation and amortization
112,056

 
108,406

 
28,785

 
27,941

 
29,261

 
26,069

 
26,302

Income tax (benefit) expense
(84
)
 
(615
)
 
23

 

 
(107
)
 

 
76

Real estate impairment loss and casualty (gain), net
33,152

 
(676
)
 
28,152

 
5,000

 

 

 

Non-real estate depreciation
657

 
524

 
243

 
178

 
120

 
116

 
119

Severance expense

 
828

 

 

 

 

 

Relocation expense

 
16

 

 

 

 

 

Acquisition and structuring expenses
319

 
1,521

 

 

 
104

 
215

 
118

Less:
 
 
 
 
 
 
 
 
 
 
 
 
 
    Gain on sale of real estate
(24,915
)
 
(101,704
)
 
(24,915
)
 

 

 

 

Adjusted EBITDA
$
188,331

 
$
180,714

 
$
46,525

 
$
48,108

 
$
49,278

 
$
44,420

 
$
43,814

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)   Adjusted EBITDA is earnings before interest expense, taxes, depreciation, amortization, gain on sale of real estate, casualty gain/loss, 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, and 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)
 

 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Balances Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Mortgage note payable, net
$
95,141

 
$
96,045

 
$
96,934

 
$
97,814

 
$
148,540

Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds and notes
595,972

 
595,809

 
595,562

 
595,315

 
595,067

Term loans
298,386

 
298,294

 
298,201

 
298,109

 
248,017

Credit facilities
166,000

 
189,000

 
228,000

 
123,000

 
120,000

Unsecured total
1,060,358

 
1,083,103

 
1,121,763

 
1,016,424

 
963,084

Total
$
1,155,499

 
$
1,179,148

 
$
1,218,697

 
$
1,114,238

 
$
1,111,624

 
 
 
 
 
 
 
 
 
 
Weighted Average Interest Rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured
 
 
 
 
 
 
 
 
 
Mortgage note payable, net
4.5
%
 
4.5
%
 
4.5
%
 
4.5
%
 
4.0
%
Unsecured
 
 
 
 
 
 
 
 
 
Fixed rate bonds
4.7
%
 
4.7
%
 
4.7
%
 
4.7
%
 
4.7
%
Term loans (1)
2.8
%
 
2.8
%
 
2.8
%
 
2.8
%
 
2.6
%
Credit facilities
2.5
%
 
2.2
%
 
2.2
%
 
2.0
%
 
1.6
%
Unsecured total
3.8
%
 
3.8
%
 
3.7
%
 
3.8
%
 
3.8
%
Weighted Average
3.9
%
 
3.8
%
 
3.8
%
 
3.9
%
 
3.8
%
 
 
 
 
 
 
 
 
 
 
(1) Washington REIT has entered into interest rate swaps to effectively fix the floating interest rates on its term loans (see page 10 of this Supplemental).
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)
 
 
 
q42017suppl_chart-18459.jpg
 
Future Maturities of Debt
Year
Secured Debt
 
Unsecured Debt
 
Credit Facility
 
Total Debt
 
Average Interest Rate
2018
$
31,674

 
$

 
$

 
$
31,674

 
5.4%
2019

 

 
166,000

(1) 
166,000

 
2.5%
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

 
150,000

(3) 

 
150,000

 
2.9%
2024

 

 

 

 

2025

 

 

 

 

2026

 

 

 

 

2027

 

 

 

 

2028

 
50,000

 

 
50,000

 
7.4%
Thereafter

 

 

 

 

Scheduled principal payments
$
76,191

 
$
900,000

 
$
166,000

 
$
1,142,191

 
3.9%
Scheduled amortization payments
15,723

 

 

 
15,723

 
4.8%
Net discounts/premiums
3,385

 
(1,580
)
 

 
1,805

 

Loan costs, net of amortization
(158
)
 
(4,062
)
 

 
(4,220
)
 
 
Total maturities
$
95,141

 
$
894,358

 
$
166,000

 
$
1,155,499

 
3.9%
Weighted average maturity = 3.9 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 interest rate swaps to effectively fix a LIBOR plus 110 basis points floating interest rate at a 2.72% all-in fixed interest rate commencing October 15, 2015.
(3) Washington REIT entered into interest rate swaps to effectively fix a LIBOR plus 165 basis points floating interest rate to a 2.86% all-in fixed interest rate commencing March 31, 2017.

10




Debt Covenant Compliance
 
 

 
Unsecured Notes Payable
 
Unsecured Line of Credit
and Term Loans
 
Quarter Ended December 31, 2017
 
Covenant
 
Quarter Ended December 31, 2017
 
Covenant
% of Total Indebtedness to Total Assets(1)
38.5
%
 
≤ 65.0%
 
 N/A

 
N/A
Ratio of Income Available for Debt Service to Annual Debt Service
4.3

 
≥ 1.5
 
 N/A

 
N/A
% of Secured Indebtedness to Total Assets(1)
3.2
%
 
≤ 40.0%
 
 N/A

 
N/A
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness
2.7

 
≥ 1.5
 
 N/A

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

 
 N/A
 
35.4
%
 
≤ 60.0%
Ratio of Consolidated Adjusted EBITDA(4) to Consolidated Fixed Charges(5)
 N/A

 
 N/A
 
3.76

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

 
 N/A
 
2.9
%
 
≤ 40.0%
% of Consolidated Unsecured Indebtedness to Unencumbered Pool Value(6) 
 N/A

 
 N/A
 
34.4
%
 
≤ 60.0%
Ratio of Unencumbered Adjusted Net Operating Income to Consolidated Unsecured Interest Expense
 N/A

 
 N/A
 
4.69

 
≥ 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)
 
 
 
 
 
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Market Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares Outstanding
 
 
 
 
78,510

 
78,464

 
76,926

 
75,702

 
74,606

Market Price per Share
 
 
 
 
$
31.12

 
$
32.76

 
$
31.90

 
$
31.28

 
$
32.69

Equity Market Capitalization
 
 
 
 
$
2,443,231

 
$
2,570,481

 
$
2,453,939

 
$
2,367,959

 
$
2,438,870

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt
 
 
 
 
$
1,155,499

 
$
1,179,148

 
$
1,218,697

 
$
1,114,238

 
$
1,111,624

Total Market Capitalization
 
 
 
 
$
3,598,730

 
$
3,749,629

 
$
3,672,636

 
$
3,482,197

 
$
3,550,494

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Debt to Market Capitalization
 
 
 
 
0.32
:1
 
0.31
:1
 
0.33
:1
 
0.32
:1
 
0.31
:1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings to Fixed Charges(1)
 
 
 
 
1.2x

 
1.2x

 
1.6x

 
1.6x

 
1.4x

Debt Service Coverage Ratio(2)
 
 
 
 
3.7x

 
3.7x

 
3.9x

 
3.6x

 
3.4x

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
Three Months Ended
 
12/31/2017
 
12/31/2016
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Total Dividends Declared
$
92,833

 
$
87,570

 
$
23,581

 
$
23,493

 
$
23,152

 
$
22,607

 
$
22,414

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)
65.9
%
 
68.2
%
 
68.2
%
 
65.2
%
 
62.5
%
 
68.2
%
 
69.8
%
Payout Ratio (Core FAD per share basis)
81.6
%
 
85.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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. The earnings to fixed charges ratio for the three months ended December 31, 2017 include gains on the sale of real estate of $25.0 million.
(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
2017 vs. 2016
 

 
Three Months Ended December 31,
 
 
 
Twelve Months Ended December 31,
 
 
 
2017
 
2016
 
% Change
 
2017
 
2016
 
% Change
Cash Basis:
 
 
 
 
 
 
 
 
 
 
 
Multifamily
$
10,753

 
$
10,407

 
3.3
 %
 
$
43,015

 
$
41,640

 
3.3
%
Office
20,955

 
20,660

 
1.4
 %
 
85,910

 
79,573

 
8.0
%
Retail
11,245

 
11,249

 
 %
 
46,156

 
44,421

 
3.9
%
Overall Same-Store Portfolio (1)
$
42,953

 
$
42,316

 
1.5
 %
 
$
175,081

 
$
165,634

 
5.7
%
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Basis:
 
 
 
 
 
 
 
 
 
 
 
Multifamily
$
10,745

 
$
10,300

 
4.3
 %
 
$
43,000

 
$
41,519

 
3.6
%
Office
20,930

 
20,420

 
2.5
 %
 
85,686

 
78,656

 
8.9
%
Retail
11,530

 
11,502

 
0.2
 %
 
47,204

 
45,706

 
3.3
%
Overall Same-Store Portfolio (1)
$
43,205

 
$
42,222

 
2.3
 %
 
$
175,890

 
$
165,881

 
6.0
%
  
(1)  Non same-store properties were:
Acquisitions:
Multifamily - Riverside Apartments
         Office - Watergate 600
Development/Redevelopment:
         Office - The Army Navy Building
Held for sale:
         Office - Braddock Metro Center
Sold properties:
Multifamily - Walker House Apartments
Office - Dulles Station II, Wayne Plaza, 600 Jefferson Plaza, 6110 Executive Boulevard, West Gude, 51 Monroe Street and One Central Plaza
 


    




13




Same-Store Portfolio Net Operating Income (NOI) Detail
(In thousands)
 
 
Three Months Ended December 31, 2017
 
Multifamily
 
Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
17,495

 
$
34,158

 
$
15,569

 
$

 
$
67,222

Non same-store - acquired and in development (1)
5,918

 
8,162

 

 

 
14,080

                         Total
23,413

 
42,320

 
15,569

 

 
81,302

 
 
 
 
 
 
 
 
 
 
Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store portfolio
6,750

 
13,228

 
4,039

 

 
24,017

Non same-store - acquired and in development (1)
2,350

 
3,083

 

 

 
5,433

                         Total
9,100

 
16,311

 
4,039

 

 
29,450

 
 
 
 
 
 
 
 
 
 
Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store portfolio
10,745

 
20,930

 
11,530

 

 
43,205

Non same-store - acquired and in development (1)
3,568

 
5,079

 

 

 
8,647

                          Total
$
14,313

 
$
26,009

 
$
11,530

 
$

 
$
51,852

 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
10,745

 
$
20,930

 
$
11,530

 
$

 
$
43,205

Straight-line revenue, net for same-store properties
7

 
(660
)
 
(146
)
 

 
(799
)
FAS 141 Min Rent
1

 
27

 
(187
)
 

 
(159
)
Amortization of lease intangibles for same-store properties

 
658

 
48

 

 
706

Same-store portfolio NOI, cash basis
$
10,753

 
$
20,955

 
$
11,245

 
$

 
$
42,953

Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
Total NOI
$
14,313

 
$
26,009

 
$
11,530

 
$

 
$
51,852

Depreciation and amortization
(7,811
)
 
(16,953
)
 
(3,818
)
 
(203
)
 
(28,785
)
General and administrative expenses

 

 

 
(5,868
)
 
(5,868
)
Real estate impairment

 

 

 
(28,152
)
 
(28,152
)
Interest expense
(977
)
 
(305
)
 
(176
)
 
(10,442
)
 
(11,900
)
Other income

 

 

 
298

 
298

Income tax expense

 

 

 
(23
)
 
(23
)
Gain on sale of real estate

 

 

 
24,915

 
24,915

Net Income
5,525

 
8,751

 
7,536

 
(19,475
)
 
2,337

Net loss attributable to noncontrolling interests

 

 

 

 

Net income attributable to the controlling interests
$
5,525

 
$
8,751

 
$
7,536

 
$
(19,475
)
 
$
2,337

 
 
 
 
 
 
 
 
 
 
(1)  For a list of non-same-store properties, see page 13 of this Supplemental.

14




Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
Three Months Ended December 31, 2016
 
Multifamily
 
Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
17,460

 
$
33,562

 
$
15,702

 
$

 
$
66,724

Non same-store - acquired and in development (1)
6,057

 
4,171

 

 

 
10,228

            Total
23,517

 
37,733

 
15,702

 

 
76,952

Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store portfolio
7,160

 
13,142

 
4,200

 

 
24,502

Non same-store - acquired and in development (1)
2,683

 
1,755

 

 

 
4,438

            Total
9,843

 
14,897

 
4,200

 

 
28,940

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store portfolio
10,300

 
20,420

 
11,502

 

 
42,222

Non same-store - acquired and in development (1)
3,374

 
2,416

 

 

 
5,790

           Total
$
13,674

 
$
22,836

 
$
11,502

 
$

 
$
48,012

 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
10,300

 
$
20,420

 
$
11,502

 
$

 
$
42,222

Straight-line revenue, net for same-store properties
106

 
(596
)
 
(70
)
 

 
(560
)
FAS 141 Min Rent
1

 
153

 
(232
)
 

 
(78
)
Amortization of lease intangibles for same-store properties

 
683

 
49

 

 
732

Same-store portfolio NOI, cash basis
$
10,407

 
$
20,660

 
$
11,249

 
$

 
$
42,316

Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
Total NOI
$
13,674

 
$
22,836

 
$
11,502

 
$

 
$
48,012

Depreciation and amortization
(7,546
)
 
(14,657
)
 
(3,897
)
 
(202
)
 
(26,302
)
General and administrative expense

 

 

 
(4,527
)
 
(4,527
)
Interest expense
(992
)
 
(834
)
 
(200
)
 
(9,747
)
 
(11,773
)
Other income

 

 

 
92

 
92

Income tax expense

 

 

 
(76
)
 
(76
)
Net income
5,136

 
7,345

 
7,405

 
(14,460
)
 
5,426

Net loss attributable to noncontrolling interests

 

 

 
19

 
19

Net income attributable to the controlling interests
$
5,136

 
$
7,345

 
$
7,405

 
$
(14,441
)
 
$
5,445

 
 
 
 
 
 
 
 
 
 
(1)  For a list of non-same-store properties, see page 13 of this Supplemental.
 
 

15




Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
Twelve Months Ended December 31, 2017
 
Multifamily
 
Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
70,203

 
$
137,447

 
$
62,390

 
$

 
$
270,040

Non same-store - acquired and in development (1)
25,047

 
29,991

 

 

 
55,038

                         Total
95,250

 
167,438

 
62,390

 

 
325,078

Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store portfolio
27,203

 
51,761

 
15,186

 

 
94,150

Non same-store - acquired and in development (1)
10,437

 
11,063

 

 

 
21,500

                         Total
37,640

 
62,824

 
15,186

 

 
115,650

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store portfolio
43,000

 
85,686

 
47,204

 

 
175,890

Non same-store - acquired and in development (1)
14,610

 
18,928

 

 

 
33,538

                          Total
$
57,610

 
$
104,614

 
$
47,204

 
$

 
$
209,428

 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
43,000

 
$
85,686

 
$
47,204

 
$

 
$
175,890

Straight-line revenue, net for same-store properties
11

 
(2,703
)
 
(407
)
 

 
(3,099
)
FAS 141 Min Rent
4

 
139

 
(838
)
 

 
(695
)
Amortization of lease intangibles for same-store properties

 
2,788

 
197

 

 
2,985

Same-store portfolio NOI, cash basis
$
43,015

 
$
85,910

 
$
46,156

 
$

 
$
175,081

 
 
 
 
 
 
 
 
 
 
Reconciliation of NOI to net income:
 
 
 
 
 
 
 
 
 
Total NOI
$
57,610

 
$
104,614

 
$
47,204

 
$

 
$
209,428

Depreciation and amortization
(30,820
)
 
(65,023
)
 
(15,396
)
 
(817
)
 
(112,056
)
General and administrative expenses

 

 

 
(22,580
)
 
(22,580
)
Real estate impairment

 

 

 
(33,152
)
 
(33,152
)
Interest expense
(3,916
)
 
(1,046
)
 
(740
)
 
(41,832
)
 
(47,534
)
Other income

 

 

 
507

 
507

Gain on sale of real estate

 

 

 
24,915

 
24,915

Income tax benefit

 

 

 
84

 
84

Net Income
22,874

 
38,545

 
31,068

 
(72,875
)
 
19,612

Net loss attributable to noncontrolling interests

 

 

 
56

 
56

Net income attributable to the controlling interests
$
22,874

 
$
38,545

 
$
31,068

 
$
(72,819
)
 
$
19,668

 
 
 
 
 
 
 
 
 
 
(1)  For a list of non-same-store properties, see page 13 of this Supplemental.

16




Same-Store Net Operating Income (NOI) Detail
(In thousands)
 
 
Twelve Months Ended December 31, 2016
 
Multifamily
 
Office
 
Retail
 
Corporate and Other
 
Total
Real estate rental revenue
 
 
 
 
 
 
 
 
 
Same-store portfolio
$
69,174

 
$
128,815

 
$
61,566

 
$

 
$
259,555

Non same-store - acquired and in development (1)
16,590

 
37,119

 

 

 
53,709

                         Total
85,764

 
165,934

 
61,566

 

 
313,264

Real estate expenses
 
 
 
 
 
 
 
 
 
Same-store portfolio
27,655

 
50,159

 
15,860

 

 
93,674

Non same-store - acquired and in development (1)
7,093

 
14,246

 

 

 
21,339

                         Total
34,748

 
64,405

 
15,860

 

 
115,013

Net Operating Income (NOI)
 
 
 
 
 
 
 
 
 
Same-store portfolio
41,519

 
78,656

 
45,706

 

 
165,881

Non same-store - acquired and in development (1)
9,497

 
22,873

 

 

 
32,370

                          Total
$
51,016

 
$
101,529

 
$
45,706

 
$

 
$
198,251

 
 
 
 
 
 
 
 
 
 
Same-store portfolio NOI GAAP basis (from above)
$
41,519

 
$
78,656

 
$
45,706

 
$

 
$
165,881

Straight-line revenue, net for same-store properties
117

 
(2,191
)
 
(508
)
 

 
(2,582
)
FAS 141 Min Rent
4

 
588

 
(974
)
 

 
(382
)
Amortization of lease intangibles for same-store properties

 
2,520

 
197

 

 
2,717

Same-store portfolio NOI, cash basis
$
41,640

 
$
79,573

 
$
44,421

 
$

 
$
165,634

Reconciliation of NOI to Net Income
 
 
 
 
 
 
 
 
 
Total NOI
$
51,016

 
$
101,529

 
$
45,706

 
$

 
$
198,251

Depreciation and amortization
(31,501
)
 
(61,181
)
 
(14,797
)
 
(927
)
 
(108,406
)
General and administrative expenses

 

 

 
(19,545
)
 
(19,545
)
Casualty gain

 

 

 
676

 
676

Acquisition costs

 

 

 
(1,178
)
 
(1,178
)
Interest expense
(6,040
)
 
(7,783
)
 
(831
)
 
(38,472
)
 
(53,126
)
Other income

 

 

 
297

 
297

Gain on sale of real estate

 

 

 
101,704

 
101,704

Income tax benefit

 

 

 
615

 
615

Net income
13,475

 
32,565

 
30,078

 
43,170

 
119,288

Net loss attributable to noncontrolling interests

 

 

 
51

 
51

Net income attributable to the controlling interests
$
13,475

 
$
32,565

 
$
30,078

 
$
43,221

 
$
119,339

 
 
 
 
 
 
 
 
 
 
(1)  For a list of non-same-store properties, see page 13 of this Supplemental.
 
 

17




Net Operating Income (NOI) by Region
 
 
 
 
 
 
Washington REIT Portfolio
Maryland/Virginia/DC
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of
Q4 2017 NOI
 
Percentage of
YTD 2017 NOI
DC
 
 
 
 
Multifamily
 
5.6
%
 
5.6
%
Office
 
29.8
%
 
28.1
%
Retail
 
1.7
%
 
1.8
%
 
 
37.1
%
 
35.5
%
 
 
 
 
 
Maryland
 
 
 
 
Multifamily
 
1.6
%
 
2.1
%
Retail
 
13.5
%
 
13.7
%
 
 
15.1
%
 
15.8
%
 
 
 
 
 
Virginia
 
 
 
 
Multifamily
 
20.4
%
 
19.8
%
Office
 
20.4
%
 
21.9
%
Retail
 
7.0
%
 
7.0
%
 
 
47.8
%
 
48.7
%
 
 
 
 
 
Total Portfolio
 
100.0
%
 
100.0
%

18




Same-Store Portfolio and Overall Ending Occupancy Levels by Sector

 

 
 
Ending Occupancy - Same-Store Properties (1), (2)
Sector
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Multifamily (calculated on a unit basis)
 
94.8
%
 
94.9
%
 
95.4
%
 
94.6
%
 
95.8
%
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
93.6
%
 
94.5
%
 
95.0
%
 
94.0
%
 
95.3
%
Office
 
93.1
%
 
93.4
%
 
93.0
%
 
93.1
%
 
91.7
%
Retail
 
91.2
%
 
93.5
%
 
91.4
%
 
93.8
%
 
95.7
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
92.7
%
 
93.8
%
 
93.2
%
 
93.6
%
 
94.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending Occupancy - All Properties
Sector
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Multifamily (calculated on a unit basis)
 
95.0
%
 
94.7
%
 
95.1
%
 
94.6
%
 
94.7
%
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.1
%
 
94.5
%
 
94.9
%
 
94.2
%
 
94.5
%
Office
 
90.1
%
 
93.2
%
 
92.9
%
 
92.4
%
 
91.1
%
Retail
 
91.2
%
 
93.5
%
 
91.4
%
 
93.8
%
 
95.7
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
91.8
%
 
93.8
%
 
93.4
%
 
93.5
%
 
93.5
%

(1) Non same-store properties were:
Acquisition:
Multifamily - Riverside Apartments
Office - Watergate 600
Development/Redevelopment:
Office - The Army Navy Building
Held for sale:
     Office - Braddock Metro Center
Sold properties:
Multifamily - Walker House Apartments
Office - Dulles Station II, Maryland Office Portfolio: Transaction I (6110 Executive Boulevard, 600 Jefferson Plaza, West Gude and Wayne Plaza) and
Transaction II (51 Monroe and One Central Plaza)

(2) Ending occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period, except for the rows labeled "Multifamily (calculated on a unit basis)," which is calculated as occupied units as a percentage of total available units as of the last day of the that period. The occupied square footage for office and retail properties includes temporary lease agreements.

19




Same-Store Portfolio and Overall Average Occupancy Levels by Sector
 
 
 
Average Occupancy - Same-Store Properties(1) (2)
Sector
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Multifamily (calculated on a unit basis)
 
94.6
%
 
95.3
%
 
95.0
%
 
95.1
%
 
95.4
%
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.7
%
 
95.4
%
 
95.1
%
 
95.1
%
 
95.3
%
Office
 
93.1
%
 
93.2
%
 
93.5
%
 
92.6
%
 
91.5
%
Retail
 
92.2
%
 
93.2
%
 
92.2
%
 
94.1
%
 
95.8
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
93.3
%
 
93.9
%
 
93.6
%
 
93.8
%
 
93.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Occupancy - All Properties
Sector
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Multifamily (calculated on a unit basis)
 
94.8
%
 
95.3
%
 
94.8
%
 
94.2
%
 
94.4
%
 
 
 
 
 
 
 
 
 
 
 
Multifamily
 
94.8
%
 
95.4
%
 
94.9
%
 
94.3
%
 
94.4
%
Office
 
89.8
%
 
93.0
%
 
93.2
%
 
92.0
%
 
90.9
%
Retail
 
92.2
%
 
93.2
%
 
92.2
%
 
94.1
%
 
95.8
%
 
 
 
 
 
 
 
 
 
 
 
Overall Portfolio
 
92.2
%
 
93.9
%
 
93.6
%
 
93.3
%
 
93.4
%
(1)  Non same-store properties were:
Acquisitions:
Multifamily - Riverside Apartments
          Office - Watergate 600
Development/Redevelopment:
         Office - The Army Navy Building
Held for sale:
         Office - Braddock Metro Center
Sold properties:
Multifamily - Walker House Apartments
Office - Dulles Station II, Wayne Plaza, 600 Jefferson Plaza, 6110 Executive Boulevard, West Gude, 51 Monroe Street and One Central Plaza

(2) Average occupancy is based on monthly occupied net rentable square footage as a percentage of total net rentable square footage, except for the rows labeled "Multifamily (calculated on a unit basis)," on which average occupancy is based on average monthly occupied units as a percentage of total units. The square footage for multifamily properties only includes residential space. The occupied square footage for office and retail properties includes temporary lease agreements.

20




Acquisition and Disposition Summary
 
Acquisition
 
 
 
 
 
 
 
 
 
 
 
 
Location
 
Acquisition Date
 
Property type
 
Square Feet
 
12/31/2017 Leased Percentage
 
Investment
(in thousands)
Watergate 600
Washington, DC
 
April 4, 2017
 
Office
 
293,000
 
100
%
 
$
135,000

 
 
 
 
 
 
 
 
 
 
 
 
Disposition
 
 
 
 
 
 
 
 
 
 
 
 
Location
 
Disposition Date
 
Property Type
 
Units
 
Contract Sales Price
 
GAAP Gain
Walker House
Gaithersburg, MD
 
October 23, 2017
 
Multifamily
 
212
 
$
32,200

 
$
23,838






21




Development/Redevelopment Summary
 
Property and Location
Total Rentable Square Feet
or # of Units
Anticipated Total Cash Cost (1)
(in thousands)
Cash Cost to Date (1)
(in thousands)
Anticipated Construction Completion Date
Leased %
Development
 
 
 
 
 
Trove (Wellington land parcel), Arlington, VA
401 units
$
122,252

$
27,897

Phase I - third quarter 2019 (2)
N/A
 
 
 
 
Phase II - third quarter 2020 (2)
 
 
 
 
 
 
 
Redevelopment
 
 
 
 
 
Spring Valley Village, Washington DC
14,000 additional square feet
$
5,593

$
2,604

first quarter 2018 (3)
N/A

(1) Represents anticipated/actual cash expenditures, and excludes allocations of capitalized corporate overhead costs and interest.

(2) This development project has two phases: Phase I consists of two buildings totaling 226 units and a garage, with delivery of units anticipated to commence in third quarter 2019; Phase II consists of one building with 175 units, anticipated to deliver first units in third quarter 2020.

(3) Substantial completion of the new building at Spring Valley Village anticipated in first quarter 2018, with completion of the site work anticipated in second quarter 2018.


22




Multifamily Rental Rate Growth
 

Year over Year Rental Rate Growth
4th Quarter 2017
 
3rd Quarter 2017
 
2nd Quarter 2017
 
1st Quarter 2017
 
4th Quarter 2016
Same-store
1.8
%
 
2.0
%
 
1.8
%
 
1.3
%
 
1.0
%
 
 
 
 
 
 
 
 
 
 
Riverside
4.6
%
 
2.5
%
 
N/A

 
N/A

 
N/A

 
 
 
 
 
 
 
 
 
 
Overall
2.2
%
 
2.1
%
 
1.8
%
 
1.2
%
 
0.9
%
Average Monthly Rent per Unit
4th Quarter 2017
 
4th Quarter 2016
 
% Change
Class A
2,297

 
2,269

 
1.2
%
 
 
 
 
 
 
Class B
1,626

 
1,586

 
2.5
%
 
 
 
 
 
 
Overall
1,732

 
1,695

 
2.2
%
 
 
 
 
 
 
See Supplemental Definitions on page 33 for definition of same-store portfolio properties.



23




Commercial Leasing Summary - New Leases
 
 
 
 
4th Quarter 2017
 
3rd Quarter 2017
 
2nd Quarter 2017
 
1st Quarter 2017
 
4th Quarter 2016
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
21,729
 
 
45,318
 
 
192,352
 
 
36,102
 
 
39,047
 
      Retail
11,061
 
 
6,961
 
 
35,582
 
 
8,355
 
 
10,362
 
Total
32,790
 
 
52,279
 
 
227,934
 
 
44,457
 
 
49,409
 
Weighted Average Term (years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
5.4
 
 
8.9
 
 
11.7
 
 
8.5
 
 
4.9
 
      Retail
5.3
 
 
6.6
 
 
11.6
 
 
6.2
 
 
9.2
 
Total
5.4
 
 
8.6
 
 
11.7
 
 
8.1
 
 
5.8
 
Weighted Average Free Rent Period (months)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
3.7
 
 
7.2
 
 
12.5
 
 
9.1
 
 
3.0
 
      Retail Centers
2.5
 
 
2.2
 
 
6.9
 
 
2.7
 
 
1.0
 
Total
3.4
 
 
6.8
 
 
11.6
 
 
8.0
 
 
2.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
$
44.80

 
$
47.40

 
$
51.09

 
$
52.17

 
$
36.32

 
$
38.30

 
$
32.50

 
$
33.83

 
$
40.36

 
$
42.92

      Retail
25.39

 
25.27

 
30.95

 
31.18

 
21.80

 
21.06

 
37.15

 
35.16

 
38.26

 
38.99

Total
$
38.25

 
$
39.94

 
$
48.41

 
$
49.37

 
$
34.13

 
$
35.69

 
$
33.37

 
$
34.08

 
$
39.92

 
$
42.10

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
$
52.58

 
$
50.19

 
$
61.14

 
$
55.43

 
$
31.14

 
$
30.63

 
$
43.20

 
$
38.67

 
$
42.64

 
$
39.96

      Retail
27.45

 
26.46

 
35.91

 
34.48

 
36.28

 
33.14

 
36.39

 
34.46

 
44.14

 
40.37

Total
$
44.11

 
$
42.19

 
$
57.78

 
$
52.64

 
$
31.92

 
$
31.01

 
$
41.92

 
$
37.88

 
$
42.96

 
$
40.05

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office
17.4
%
 
5.9
%
 
19.7
%
 
6.3
%
 
(14.2
)%
 
(20.0
)%
 
33.0
 %
 
14.3
 %
 
5.7
%
 
(6.9
)%
      Retail
8.1
%
 
4.7
%
 
16.0
%
 
10.6
%
 
66.4
 %
 
57.4
 %
 
(2.1
)%
 
(2.0
)%
 
15.4
%
 
3.5
 %
Total
15.3
%
 
5.6
%
 
19.4
%
 
6.6
%
 
(6.5
)%
 
(13.1
)%
 
25.6
 %
 
11.1
 %
 
7.6
%
 
(4.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
Tenant Improvements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
1,378,204

 
$
63.43

 
$
3,740,775

 
$
82.55

 
$
11,732,915

 
$
61.00

 
$
2,333,378

 
$
64.63

 
$
1,244,745

 
$
31.88

Retail Centers
54,410

 
4.92

 
244,213

 
35.08

 
1,923,540

 
54.06

 
60,030

 
7.18

 
307,953

 
29.72

Subtotal
$
1,432,614

 
$
43.69

 
$
3,984,988

 
$
76.23

 
$
13,656,455

 
$
59.91

 
$
2,393,408

 
$
53.84

 
$
1,552,698

 
$
31.43

Leasing Commissions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
312,397

 
$
14.38

 
$
1,299,136

 
$
28.67

 
$
3,263,054

 
$
16.96

 
$
688,811

 
$
19.08

 
$
424,951

 
$
10.88

Retail Centers
78,751

 
7.12

 
79,597

 
11.43

 
620,605

 
17.44

 
98,930

 
11.84

 
212,162

 
20.48

Subtotal
$
391,148

 
$
11.93

 
$
1,378,733

 
$
26.37

 
$
3,883,659

 
$
17.04

 
$
787,741

 
$
17.72

 
$
637,113

 
$
12.89

Tenant Improvements and Leasing Commissions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
1,690,601

 
$
77.81

 
$
5,039,911

 
$
111.22

 
$
14,995,969

 
$
77.96

 
$
3,022,189

 
$
83.71

 
$
1,669,696

 
$
42.76

Retail Centers
133,161

 
12.04

 
323,810

 
46.51

 
2,544,145

 
71.50

 
158,960

 
19.02

 
520,115

 
50.20

Total
$
1,823,762

 
$
55.62

 
$
5,363,721

 
$
102.60

 
$
17,540,114

 
$
76.95

 
$
3,181,149

 
$
71.56

 
$
2,189,811

 
$
44.32


24




Commercial Leasing Summary - Renewal Leases

 
 
4th Quarter 2017
 
3rd Quarter 2017
 
2nd Quarter 2017
 
1st Quarter 2017
 
4th Quarter 2016
Gross Leasing Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
49,090
 
 
10,531
 
 
22,026
 
 
104,283
 
 
64,956
 
      Retail Centers
11,481
 
 
40,780
 
 
116,740
 
 
47,279
 
 
65,934
 
Total
60,571
 
 
51,311
 
 
138,766
 
 
151,562
 
 
130,890
 
Weighted Average Term (years)
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
4.4
 
 
5.9
 
 
6.5
 
 
11.8
 
 
4.9
 
      Retail Centers
7.7
 
 
4.4
 
 
5.0
 
 
5.7
 
 
4.9
 
Total
5.0
 
 
4.7
 
 
5.3
 
 
9.9
 
 
4.9
 
Weighted Average Free Rent Period (months)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Office Buildings
0.3
 
 
2.2
 
 
3.0
 
 
12.1
 
 
3.1
 
      Retail Centers
1.5
 
 
 
 
 
 
 
 
 
Total
0.6
 
 
0.8
 
 
0.9
 
 
9.1
 
 
1.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Increases:
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
 
GAAP
 
CASH
      Rate on expiring leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
34.21

 
$
37.14

 
$
47.80

 
$
48.03

 
$
50.64

 
$
51.78

 
$
46.52

 
$
50.00

 
$
43.31

 
$
43.62

            Retail Centers
32.21

 
32.49

 
25.80

 
26.09

 
21.10

 
21.35

 
32.13

 
33.61

 
27.52

 
27.66

Total
$
33.86

 
$
36.34

 
$
30.32

 
$
30.59

 
$
25.79

 
$
26.18

 
$
42.03

 
$
44.88

 
$
35.36

 
$
35.58

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Rate on new leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
$
34.14

 
$
32.60

 
$
56.91

 
$
55.80

 
$
58.15

 
$
55.54

 
$
58.13

 
$
50.05

 
$
46.84

 
$
44.18

            Retail Centers
37.18

 
36.07

 
26.49

 
26.28

 
23.43

 
23.21

 
37.10

 
35.64

 
30.27

 
29.81

Total
$
34.67

 
$
33.20

 
$
32.74

 
$
32.34

 
$
28.94

 
$
28.34

 
$
51.57

 
$
45.56

 
$
38.49

 
$
36.94

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Percentage Increase
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            Office Buildings
(0.2
)%
 
(12.2
)%
 
19.1
%
 
16.2
%
 
14.8
%
 
7.3
%
 
25.0
%
 
0.1
%
 
8.1
%
 
1.3
%
            Retail Centers
15.4
 %
 
11.0
 %
 
2.7
%
 
0.7
%
 
11.1
%
 
8.7
%
 
15.5
%
 
6.0
%
 
10.0
%
 
7.8
%
Total
2.4
 %
 
(8.6
)%
 
8.0
%
 
5.7
%
 
12.2
%
 
8.3
%
 
22.7
%
 
1.5
%
 
8.9
%
 
3.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
 
Total Dollars
 
$ per Sq Ft
Tenant Improvements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
687,818

 
$
14.01

 
$
126,994

 
$
12.06

 
$
279,990

 
$
12.71

 
$
9,703,224

 
$
93.05

 
$
1,068,629

 
$
16.45

Retail Centers

 

 

 

 
22,800

 
0.20

 
111,925

 
2.37

 
56,940

 
0.86

Subtotal
$
687,818

 
$
11.36

 
$
126,994

 
$
2.47

 
$
302,790

 
$
2.18

 
$
9,815,149

 
$
64.76

 
$
1,125,569

 
$
8.60

Leasing Commissions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
303,570

 
$
6.18

 
$
89,452

 
$
8.49

 
$
196,926

 
$
8.94

 
$
2,981,750

 
$
28.59

 
$
735,713

 
$
11.33

Retail Centers
38,753

 
3.38

 
32,754

 
0.80

 
59,431

 
0.51

 
137,765

 
2.91

 
120,858

 
1.83

Subtotal
$
342,323

 
$
5.65

 
$
122,206

 
$
2.38

 
$
256,357

 
$
1.85

 
$
3,119,515

 
$
20.58

 
$
856,571

 
$
6.54

Tenant Improvements and Leasing Commissions
 
 
 
 
 
 
 
 
 
 
Office Buildings
$
991,388

 
$
20.19

 
$
216,446

 
$
20.55

 
$
476,916

 
$
21.65

 
$
12,684,974

 
$
121.64

 
$
1,804,342

 
$
27.78

Retail Centers
38,753

 
3.38

 
32,754

 
0.80

 
82,231

 
0.71

 
249,690

 
5.28

 
177,798

 
2.69

Total
$
1,030,141

 
$
17.01

 
$
249,200

 
$
4.85

 
$
559,147

 
$
4.03

 
$
12,934,664

 
$
85.34

 
$
1,982,140

 
$
15.14


25




10 Largest Tenants - Based on Annualized Commercial Income
 
December 31, 2017
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
 
 
 
 
 
 
 
 
 
 
Advisory Board Company
2
 
17
 
5.8
%
 
310,668

 
5.5
%
World Bank
1
 
36
 
5.7
%
 
210,354

 
3.7
%
Atlantic Media, Inc.
1
 
118
 
3.9
%
 
140,208

 
2.5
%
Capital One
5
 
52
 
3.1
%
 
148,742

 
2.6
%
Booz Allen Hamilton, Inc.
1
 
97
 
2.4
%
 
222,989

 
3.9
%
Blank Rome LLP (1)
1
 
24
 
2.4
%
 
67,843

 
1.2
%
Hughes Hubbard & Reed LLP
1
 
162
 
1.7
%
 
54,154

 
1.0
%
Epstein, Becker & Green, P.C.
1
 
132
 
1.4
%
 
55,318

 
1.0
%
Alexandria City School Board
1
 
137
 
1.3
%
 
84,693

 
1.5
%
Ankura Consulting Group, LLC
1
 
44
 
1.1
%
 
41,474

 
0.7
%
Total/Weighted Average
 
 
67
 
28.8
%
 
1,336,443

 
23.6
%

(1) The weighted average remaining lease term for Blank Rome LLP's space includes the effect of a master lease agreement, under which another tenant will assume the majority of Blank Rome LLP's space for an additional 12 months.








26




Industry Diversification - Office
 
December 31, 2017
Industry Classification (NAICS)
Annualized Base Rental Revenue
 
Percentage of Aggregate Annualized Rent
 
Aggregate Rentable Square Feet
 
Percentage of Aggregate Square Feet
Office:
 
 
 
 
 
 
 
Professional, Scientific, and Technical Services
$
49,495,293

 
33.72
%
 
1,412,661

 
39.40
%
Finance and Insurance
23,512,782

 
16.02
%
 
498,975

 
13.91
%
Other Services (except Public Administration)
19,871,044

 
13.54
%
 
451,687

 
12.59
%
Legal Services
15,721,716

 
10.71
%
 
310,064

 
8.65
%
Information
15,099,310

 
10.29
%
 
304,520

 
8.49
%
Health Care and Social Assistance
5,407,879

 
3.68
%
 
151,173

 
4.21
%
Educational Services
5,271,953

 
3.59
%
 
159,714

 
4.45
%
Retail Trade
3,143,534

 
2.14
%
 
63,836

 
1.78
%
Miscellaneous:
 
 
 
 
 
 
 
Public Administration
2,922,802

 
1.99
%
 
66,172

 
1.84
%
Accommodation and Food Services
1,813,729

 
1.24
%
 
47,977

 
1.34
%
Real Estate and Rental and Leasing
1,524,225

 
1.04
%
 
39,567

 
1.10
%
Construction
917,414

 
0.63
%
 
25,507

 
0.71
%
Other
2,065,688

 
1.41
%
 
54,746

 
1.53
%
Total
$
146,767,369

 
100.00
%
 
3,586,599

 
100.00
%
Note: Federal government tenants comprise up to 1.3% of annualized base rental revenue.
q42017suppl_chart-18498.jpg

27




Industry Diversification - Retail
 
December 31, 2017

Industry Classification (NAICS)
Annualized Base Rental Revenue
 
Percentage of Aggregate Annualized Rent
 
Aggregate Rentable Square Feet
 
Percentage of Aggregate Square Feet
Retail:
 
 
 
 
 
 
 
Retail Trade
$
26,727,527

 
56.32
%
 
1,425,179

 
69.64
%
Accommodation and Food Services
7,586,971

 
15.99
%
 
226,449

 
11.06
%
Finance and Insurance
4,112,381

 
8.67
%
 
53,876

 
2.63
%
Other Services (except Public Administration)
3,588,762

 
7.56
%
 
113,936

 
5.57
%
Arts, Entertainment, and Recreation
1,938,368

 
4.08
%
 
126,838

 
6.20
%
Health Care and Social Assistance
1,307,738

 
2.76
%
 
36,151

 
1.77
%
Miscellaneous:
 
 
 
 
 
 
 
Information
756,440

 
1.59
%
 
17,047

 
0.83
%
Wholesale Trade
463,936

 
0.98
%
 
13,736

 
0.67
%
Educational Services
295,070

 
0.62
%
 
9,184

 
0.45
%
Other
678,218

 
1.43
%
 
24,239

 
1.18
%
Total
$
47,455,411

 
100.00
%
 
2,046,635

 
100.00
%
q42017suppl_chart-18076.jpg

28




Lease Expirations
 
December 31, 2017
Year
 
Number of Leases
 
Rentable Square Feet
 
Percent of Rentable Square Feet
 
Annualized Rent (1)
 
Average Rental Rate
 
Percent of Annualized Rent (1)
Office:
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
46

 
213,500

 
5.74
%
 
$
8,508,470

 
$
39.85

 
4.95
%
2019
 
62

 
636,587

 
17.11
%
 
28,560,581

 
44.87

 
16.60
%
2020
 
49

 
428,210

 
11.51
%
 
20,481,933

 
47.83

 
11.91
%
2021
 
62

 
444,032

 
11.94
%
 
19,074,283

 
42.96

 
11.09
%
2022
 
37

 
370,262

 
9.95
%
 
16,758,484

 
45.26

 
9.74
%
2023 and thereafter
 
163

 
1,627,580

 
43.75
%
 
78,629,597

 
48.31

 
45.71
%
 
 
419

 
3,720,171

 
100.00
%
 
$
172,013,348

 
46.24

 
100.00
%
Retail:
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
26

 
236,324

 
11.41
%
 
$
2,740,956

 
$
11.60

 
5.23
%
2019
 
31

 
118,833

 
5.74
%
 
3,664,977

 
30.84

 
6.99
%
2020
 
40

 
385,014

 
18.59
%
 
7,163,444

 
18.61

 
13.66
%
2021
 
23

 
218,039

 
10.53
%
 
3,891,705

 
17.85

 
7.42
%
2022
 
45

 
298,518

 
14.41
%
 
8,170,226

 
27.37

 
15.58
%
2023 and thereafter
 
117

 
814,354

 
39.32
%
 
26,808,399

 
32.92

 
51.12
%
 
 
282

 
2,071,082

 
100.00
%
 
$
52,439,707

 
25.32

 
100.00
%
Total:
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
72

 
449,824

 
7.77
%
 
$
11,249,426

 
$
25.01

 
5.01
%
2019
 
93

 
755,420

 
13.04
%
 
32,225,558

 
42.66

 
14.36
%
2020
 
89

 
813,224

 
14.04
%
 
27,645,377

 
33.99

 
12.32
%
2021
 
85

 
662,071

 
11.43
%
 
22,965,988

 
34.69

 
10.23
%
2022
 
82

 
668,780

 
11.55
%
 
24,928,710

 
37.27

 
11.11
%
2023 and thereafter
 
280

 
2,441,934

 
42.17
%
 
105,437,996

 
43.18

 
46.97
%
 
 
701

 
5,791,253

 
100.00
%
 
$
224,453,055

 
38.76

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

29




Schedule of Properties
 
December 31, 2017
Properties
 
Location
 
Year Acquired
 
Year Constructed
 
Net Rentable Square Feet
 
Leased % (1)
 
Ending Occupancy
Office Buildings
 
 
 
 
 
 
 
 
 
 
 
 
515 King Street
 
Alexandria, VA
 
1992
 
1966
 
75,000

 
94
%
 
94
%
Courthouse Square
 
Alexandria, VA
 
2000
 
1979
 
118,000

 
93
%
 
91
%
Braddock Metro Center
 
Alexandria, VA
 
2011
 
1985
 
356,000

 
97
%
 
60
%
1600 Wilson Boulevard
 
Arlington, VA
 
1997
 
1973
 
170,000

 
100
%
 
98
%
Fairgate at Ballston
 
Arlington, VA
 
2012
 
1988
 
146,000

 
94
%
 
92
%
Monument II
 
Herndon, VA
 
2007
 
2000
 
208,000

 
88
%
 
84
%
925 Corporate Drive
 
Stafford, VA
 
2010
 
2007
 
135,000

 
68
%
 
69
%
1000 Corporate Drive
 
Stafford, VA
 
2010
 
2009
 
136,000

 
63
%
 
63
%
Silverline Center
 
Tysons, VA
 
1997
 
1972/1986/1999/2015
 
549,000

 
97
%
 
96
%
John Marshall II
 
Tysons, VA
 
2011
 
1996/2010
 
223,000

 
100
%
 
100
%
1901 Pennsylvania Avenue
 
Washington, DC
 
1977
 
1960
 
100,000

 
97
%
 
87
%
1220 19th Street
 
Washington, DC
 
1995
 
1976
 
105,000

 
99
%
 
97
%
1776 G Street
 
Washington, DC
 
2003
 
1979
 
264,000

 
100
%
 
100
%
2000 M Street
 
Washington, DC
 
2007
 
1971
 
233,000

 
100
%
 
99
%
2445 M Street
 
Washington, DC
 
2008
 
1986
 
292,000

 
100
%
 
99
%
1140 Connecticut Avenue
 
Washington, DC
 
2011
 
1966
 
184,000

 
92
%
 
91
%
1227 25th Street
 
Washington, DC
 
2011
 
1988
 
137,000

 
95
%
 
94
%
Army Navy Building
 
Washington, DC
 
2014
 
1912/1987
 
109,000

 
91
%
 
79
%
1775 Eye Street, NW
 
Washington, DC
 
2014
 
1964
 
188,000

 
100
%
 
99
%
Watergate 600
 
Washington, DC
 
2017
 
1972/1997
 
293,000

 
100
%
 
98
%
Subtotal
 
 
 
 
 
 
 
4,021,000

 
95
%
 
90
%

(1) The leased square footage for office and retail properties includes temporary lease agreements.



30



Schedule of Properties
 
December 31, 2017
Properties
 
Location
 
Year Acquired
 
Year Constructed
 
Net Rentable Square Feet
 
Leased % (1)
 
Ending Occupancy
Retail Centers
 
 
 
 
 
 
 
 
 
 
 
 
Bradlee Shopping Center
 
Alexandria, VA
 
1984
 
1955
 
172,000

 
96
%
 
97
%
Shoppes of Foxchase
 
Alexandria, VA
 
1994
 
1960/2006
 
134,000

 
98
%
 
97
%
800 S. Washington Street
 
Alexandria, VA
 
1998/2003
 
1955/1959
 
46,000

 
93
%
 
93
%
Concord Centre
 
Springfield, VA
 
1973
 
1960
 
75,000

 
77
%
 
77
%
Gateway Overlook
 
Columbia, MD
 
2010
 
2007
 
220,000

 
100
%
 
98
%
Frederick County Square
 
Frederick, MD
 
1995
 
1973
 
228,000

 
93
%
 
93
%
Frederick Crossing
 
Frederick, MD
 
2005
 
1999/2003
 
295,000

 
89
%
 
89
%
Centre at Hagerstown
 
Hagerstown, MD
 
2002
 
2000
 
333,000

 
95
%
 
86
%
Olney Village Center
 
Olney, MD
 
2011
 
1979/2003
 
198,000

 
99
%
 
95
%
Randolph Shopping Center
 
Rockville, MD
 
2006
 
1972
 
83,000

 
88
%
 
67
%
Montrose Shopping Center
 
Rockville, MD
 
2006
 
1970
 
147,000

 
97
%
 
97
%
Takoma Park
 
Takoma Park, MD
 
1963
 
1962
 
51,000

 
100
%
 
100
%
Westminster
 
Westminster, MD
 
1972
 
1969
 
150,000

 
98
%
 
95
%
Wheaton Park
 
Wheaton, MD
 
1977
 
1967
 
74,000

 
92
%
 
92
%
Chevy Chase Metro Plaza
 
Washington, DC
 
1985
 
1975
 
49,000

 
88
%
 
89
%
Spring Valley Village
 
Washington, DC
 
2014
 
1941/1950
 
78,000

 
86
%
 
82
%
Subtotal
 
 
 
 
 
 
 
2,333,000

 
94
%
 
91
%

(1) The leased square footage for office and retail properties includes temporary lease agreements.


31



Schedule of Properties
 
December 31, 2017
Properties
 
Location
 
Year Acquired
 
Year Constructed
 
Net Rentable Square Feet
 
Leased % (1)
 
Ending Occupancy (1)
Multifamily Buildings / # units
 
 
 
 
 
 
 
 
 
 
 
 
Clayborne / 74
 
Alexandria, VA
 
2008
 
2008
 
60,000

 
93
%
 
95
%
Riverside Apartments / 1,222
 
Alexandria, VA
 
2016
 
1971
 
1,001,000

 
97
%
 
96
%
Park Adams / 200
 
Arlington, VA
 
1969
 
1959
 
173,000

 
96
%
 
94
%
Bennett Park / 224
 
Arlington, VA
 
2007
 
2007
 
215,000

 
96
%
 
96
%
The Paramount /135
 
Arlington, VA
 
2013
 
1984
 
141,000

 
95
%
 
96
%
The Maxwell / 163
 
Arlington, VA
 
2014
 
2014
 
116,000

 
98
%
 
98
%
The Wellington / 711
 
Arlington, VA
 
2015
 
1960
 
600,000

 
97
%
 
95
%
Roosevelt Towers / 191
 
Falls Church, VA
 
1965
 
1964
 
170,000

 
95
%
 
94
%
The Ashby at McLean / 256
 
McLean, VA
 
1996
 
1982
 
274,000

 
95
%
 
96
%
Bethesda Hill Apartments /195
 
Bethesda, MD
 
1997
 
1986
 
225,000

 
95
%
 
95
%
3801 Connecticut Avenue / 307
 
Washington, DC
 
1963
 
1951
 
178,000

 
97
%
 
94
%
Kenmore Apartments / 374
 
Washington, DC
 
2008
 
1948
 
268,000

 
95
%
 
92
%
Yale West / 216
 
Washington, DC
 
2014
 
2011
 
173,000

 
97
%
 
96
%
Subtotal (4,268 units)
 
 
 
 
 
 
 
3,594,000

 
96
%
 
95
%
TOTAL
 
 
 
 
 
 
 
9,948,000

 
 
 
 

(1) Leased percentage and ending occupancy calculations are based on units for multifamily buildings.






32




Supplemental Definitions

 
December 31, 2017
Adjusted EBITDA (a non-GAAP measure) is earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, casualty gain, 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.
Average occupancy is based on monthly occupied net rentable square footage as a percentage of total net rentable square footage, except for the rows labeled "Multifamily (calculated on a unit basis)," on which average occupancy is based on average monthly occupied units as a percentage of total units. The square footage for multifamily properties only includes residential space. The occupied square footage for office and retail properties includes temporary lease agreements.
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.
Ending Occupancy is calculated as occupied square footage as a percentage of total square footage as of the last day of that period. Multifamily unit basis ending occupancy is calculated as occupied units as a percentage of total units as of the last day of that period.
NAREIT Funds from operations ("NAREIT FFO") is defined by 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, impairment of depreciable real estate and 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. Our FFO may not be comparable to FFO reported by other real estate investment trusts. These other REITs may not define the term in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently. 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, casualty gains and losses, 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 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.
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, casualty gains and losses, 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 performance 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.

33



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, casualty gains and losses, 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 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.
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 properties that were owned for the entirety of the years being compared, and exclude properties under redevelopment or development and properties acquired, sold or classified as held for sale during the years being compared. We define development properties as those for which we have planned or ongoing major construction activities on existing or acquired land pursuant to an authorized development plan. We consider a property's development activities to be complete when the property is ready for its intended use. The property is categorized as same-store when it has been ready for its intended use for the entirety of the years being compared. We define redevelopment properties as those for which have planned or ongoing significant development and construction activities on existing or acquired buildings pursuant to an authorized plan, which has an impact on current operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. We categorize a redevelopment property as same-store when redevelopment activities have been complete for the majority of each year being compared.
Same-store portfolio NOI growth is the change in the NOI of the same-store portfolio properties from the prior reporting period to the current reporting period.



34