NEWS RELEASE
[LETTERHEAD OF WASHINGTON REAL ESTATE INVESTMENT TRUST]
FOR IMMEDIATE RELEASE November 5, 2001
Page 1 of 8
WASHINGTON REAL ESTATE INVESTMENT TRUST
3/RD/ QUARTER 2001 EPS Up 19%, FFO Per Share Up 9%
Washington Real Estate Investment Trust (WRIT) reported the following results
today:
Q3 2001 Q3 2000 % Change
--------- --------- ---------
Earnings Per Share $0.43 $0.36 19.4%
Funds From Operations Per Share $0.50 $0.46 8.7%
Funds Available for Distribution Per Share $0.43 $0.31 38.7%
(Details regarding the above amounts are contained in the following pages. All
amounts are diluted per share amounts.)
Edmund B. Cronin, Jr. Chairman, President and CEO, stated that, "WRIT's earnings
growth is due to the excellent performance of recent acquisitions, combined with
the strong core portfolio net operating income increase of 6.5%." WRIT's core
portfolio excludes properties not owned for the entirety of both periods being
compared.
WRIT is a self-administered, self-managed, equity real estate investment trust
investing in income-producing properties in the greater Washington-Baltimore
region. The Trust owns a diversified portfolio of 58 properties consisting of 10
retail centers, 23 office properties, 16 industrial properties and 9 multifamily
properties.
WRIT's streak of 35 consecutive years of increased earnings per share and 28
consecutive years of increased FFO per share growth spans 4 recessions. WRIT's
dividends have increased every year for 30 consecutive years. During these 30
years, WRIT's dividends have increased 36 times, a record unmatched by any other
publicly traded real estate investment trust. WRIT shares are publicly traded on
the New York Stock Exchange (symbol: WRE).
Certain statements in this press release and the supplemental disclosures
attached hereto are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements involve known
and unknown risks, uncertainties and other factors that may cause actual results
to differ materially. Such risks, uncertainties and other factors include, but
are not limited to, fluctuations in interest rates, availability of raw
materials and labor costs, levels of competition, the effect of government
regulation, the availability of capital, weather conditions, the timing and
pricing of lease transactions and changes in general and local economic and real
estate market conditions.
FOR IMMEDIATE RELEASE
Page 2 of 8 November 5, 2001
WASHINGTON REAL ESTATE INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
Quarter Ended September 30, Nine Months Ended September 30,
OPERATING RESULTS 2001 2000 2001 2000
----------------- --------------- ----------------- -------------- ----------------
Real estate rental revenue $ 37,873 $ 34,230 $ 110,618 $ 99,520
Real estate expenses (10,813) (9,676) (31,805) (28,679)
------------- ------------ -------------- ------------
27,060 24,554 78,813 70,841
Real estate depreciation and amortization (6,800) (5,810) (19,694) (16,889)
------------- ------------ -------------- ------------
Income from real estate $ 20,260 $ 18,744 $ 59,119 $ 53,952
Other income 302 288 1,251 679
Interest expense (6,731) (6,394) (20,178) (18,796)
General and administrative (1,303) (1,914) (4,541) (5,757)
------------- ------------ -------------- ------------
Income before gain on sale of real estate $ 12,528 $ 10,724 $ 35,651 $ 30,078
Gain on sale of real estate 4,296 2,069 4,296 3,567
------------- ------------ -------------- ------------
Net Income $ 16,824 $ 12,793 $ 39,947 $ 33,645
============= ============ ============== ============
Gain on Sale of Real Estate (4,296) (2,069) (4,296) (3,567)
Divestiture Sharing Distribution (22) - (537) -
Real estate depreciation and amortization 6,800 5,810 19,694 16,889
------------- ------------ -------------- ------------
Funds From Operations $ 19,306 $ 16,534 $ 54,808 $ 46,967
============= ============ ============== ============
Tenant Improvements (820) (2,579) (2,609) (5,019)
Recurring Capital Improvements (1,554) (1,603) (4,335) (5,246)
Leasing Commissions Capitalized (182) (758) (695) (1,757)
Straight Line Rents, Net of Reserve (526) (851) (1,802) (1,973)
Non Real Estate Depreciation & Amortization 430 421 1,340 1,287
Divestiture Sharing Distribution 22 - 537 -
------------- ------------ -------------- ------------
Funds Available for Distribution $ 16,676 $ 11,164 $ 47,244 $ 34,259
============= ============ ============== ============
Per Share Data
--------------
Income before gain on real estate (Basic) $ 0.33 $ 0.30 $ 0.96 $ 0.84
(Diluted) $ 0.32 $ 0.30 $ 0.95 $ 0.84
Net Income (Basic) $ 0.44 $ 0.36 $ 1.07 $ 0.94
(Diluted) $ 0.43 $ 0.36 $ 1.06 $ 0.94
Funds From Operations (Basic) $ 0.50 $ 0.46 $ 1.47 $ 1.31
(Diluted) $ 0.50 $ 0.46 $ 1.46 $ 1.31
Funds Available for Distribution (Basic) $ 0.43 $ 0.31 $ 1.27 $ 0.85
(Diluted) $ 0.43 $ 0.31 $ 1.26 $ 0.85
Dividends paid $ 0.3325 $ 0.3125 $ 0.9775 $ 0.9175
Weighted average shares outstanding 38,460,018 35,733,793 37,311,583 35,733,793
Fully diluted weighted average shares
outstanding 38,795,143 35,931,956 37,618,006 35,829,173
Washington Real Estate Investment Trust
Q3 2001 Supplemental Disclosures
Page 3 of 8
WASHINGTON REAL ESTATE INVESTMENT TRUST
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
September 30, December 31,
2001 2000
------------- ------------
Assets
Real estate, at cost $ 746,858 $ 698,513
Accumulated depreciation (116,463) (100,906)
------------- ------------
Total investment in real estate, net 630,395 597,607
Cash and cash equivalents 32,953 6,426
Rents and other receivables, net of allowance for doubtful
accounts of $1,902 and $1,743, respectively 10,705 9,796
Prepaid expenses and other assets 20,748 19,587
------------- ------------
Total Assets $ 694,801 $ 633,416
============= ============
Liabilities
Accounts payable and other liabilities $ 11,776 $ 13,048
Advance rents 2,791 3,270
Tenant security deposits 6,071 5,624
Mortgage notes payable 85,641 86,260
Notes payable 265,000 265,000
------------- ------------
Total Liabilities 371,279 373,202
------------- ------------
Minority interest 1,594 1,558
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Shareholders' Equity
Shares of beneficial interest, $.01 par value; 100,000
shares authorized: 38,693 and 35,740 shares issued
and outstanding, respectively 387 357
Additional paid-in capital 321,541 258,299
------------- ------------
Total Shareholders' Equity 321,928 258,656
------------- ------------
Total Liabilities and Shareholders' Equity $ 694,801 $ 633,416
============= ============
Washington Real Estate Investment Trust
Q3 2001 Supplemental Disclosures
Page 4 of 8
WRIT's FFO Per Share Growth has averaged 560 basis points greater than the REIT
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Industry average over the last 6 quarters
-----------------------------------------
As reflected in the following graph WRIT's FFO per share growth, as compared to
the corresponding quarter in the preceding calendar year, continues to
significantly outperform the industry.
WRIT vs. REIT Industry FFO Share Growth Over Last 6 Quarters
[GRAPH]
WRIT REIT INDUSTRY
---- -------------
Q2 2000 10.6% 8.5%
Q3 2000 15.8% 7.9%
Q4 2000 15.0% 7.5%
Q1 2001 12.5% 6.9%
Q2 2001 14.6% 5.7%
Q3 2001 9.1% N/A
Average 12.9% 7.3%
* WRIT growth is shown excluding straight-line rents. Were straight-line rents
to be included, WRIT's average growth would be higher.
** REIT industry data for Q2 2000 - Q2 2001 is actual FFO per share growth per
Credit Suisse First Boston Equity REIT Research. Q3 2001 industry data is not
yet available and, therefore, the industry average is the average over Q2 2000 -
Q2 2001.
Core Portfolio Operating Income (NOI) Growth and Rental Rate Growth - Q3 2001
-----------------------------------------------------------------------------
vs. Q3 2000
-----------
Including Straight Line Rents Excluding Straight Line Rents
----------------------------- -----------------------------
Rental Rate Rental Rate
Sector NOI Growth Growth NOI Growth Growth
------ ---------- ------- ---------- -------
Multifamily 9.6% 7.7% 9.4% 7.7%
Office Buildings 5.3% 3.5% 7.4% 5.4%
Retail Centers 4.1% 4.8% 0.4% 5.4%
Industrial Centers 9.5% 3.9% 14.8% 6.6%
--- --- ---- ---
Overall Core Portfolio 6.5% 4.6% 7.8% 6.0%
Core portfolio operating expenses increased 2.0% in Q3 2001 vs. Q3 2000.
Washington Real Estate Investment Trust
Q3 2001 Supplemental Disclosures
Page 5 of 8
Core Portfolio & Overall Occupancy Levels by Sector
---------------------------------------------------
Core Portfolio All Properties
-------------- --------------
3rd QTR 3rd QTR 3rd QTR 3rd QTR
Sector 2001 2000 2001 2000
---- ---- ---- ----
Multifamily 96.4% 97.5% 96.4% 97.5%
Office Buildings 96.9% 97.1% 97.1% 97.1%
Retail Centers 95.3% 95.0% 95.3% 94.9%
Industrial Centers 98.9% 96.5% 98.9% 96.5%
---- ---- ---- ----
Overall Portfolio 96.9% 96.8% 96.9% 96.8%
WRIT's Core Portfolio NOI Growth has averaged 190 basis points greater than the
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REIT Industry average over the last 6 quarters
----------------------------------------------
As reflected in the following graph WRIT's core portfolio NOI growth, as
compared to the corresponding quarter in the preceding calendar year, continues
to significantly outperform the industry.
WRIT vs. REIT Industry
Core Portfilio NOI Growth
Over Last 6 Quarters
[GRAPH]
WRIT REIT INDUSTRY
---- -------------
Q2 2000 7.4% 6.3%
Q3 2000 10.4% 6.8%
Q4 2000 8.2% 6.8%
Q1 2001 7.5% 6.1%
Q2 2001 8.7% 5.9%
Q3 2001 7.8% N/A
Average 8.3% 6.4%
* WRIT growth is shown excluding straight-line rents. Were straight-line rents
to be included, WRIT's average growth would be higher.
** REIT Industry Same Store NOI growth data is per Salomon Smith Barney Equity
REIT Research. Q3 2001 industry data is not yet available and, therefore, the
industry average is the average over Q2 2000-Q2 2001.
Washington Real Estate Investment Trust
Q3 2001 Supplemental Disclosures
Page 6 of 8
Straight-line Rents
-------------------
The following disclosure is provided to improve comparability between Q3 2001
and prior quarters (all amounts except per share amounts are in $000's):
Including Straight Line Rents Excluding Straight Line Rents
----------------------------- -----------------------------
3rd QTR 3rd QTR 3rd QTR 3rd QTR
2001 2000 2001 2000
---- ---- ---- ----
Straight Line Rent, Net $ 526 $ 851 N/A N/A
FFO $ 19,306 $ 16,534 $ 18,780 $ 15,683
FFO Per Share $ 0.498 $ 0.460 $ 0.484 $ 0.436
FFO Per Share Growth - Nominal 8.15% 10.90%
FFO Per Share Growth - Rounded 8.70% 9.09%
Core Portfolio Operating Income
(NOI) Growth 6.5% 7.8%
Q3 2001 Commercial Leasing Activity
-----------------------------------
In Q3 2001, WRIT executed leases for 297,000 square feet of commercial space at
a weighted average increase over the prior rent in place of 17.1% on a cash
basis and 25.9% on a straight-line basis. Details by sector are as follows:
Cash Basis Cash Basis
Previous New Cash Basis Straight-Line
Sector Square Feet Face Rent Face Rent % Increase % Increase
------ ----------- --------- --------- ---------- ----------
Office 153,530 $ 23.93 $ 28.02 17.1% 27.0%
Retail 51,936 11.24 13.15 17.1% 24.4%
Industrial 91,500 6.49 7.57 16.7% 20.4%
----------- --------- --------- ----- ----
Overall 296,966 $ 16.33 $ 19.12 17.1% 25.9%
Avg Term Avg Tenant
Sector Years Imp/SF
------ ----- ------
Office 4.0 $ 2.24
Retail 7.0 -
Industrial 2.2 0.29
-------- ----------
Overall 2.8 $ 1.32
Washington Real Estate Investment Trust
Q3 2001 Supplemental Disclosures
Page 7 of 8
Acquisitions
------------
There were no acquisitions for the quarter ended September 30, 2001. On November
1, 2001 WRIT acquired Sullyfield Commerce Center, a two building industrial
complex in Chantilly, VA for $21.6 million. Sullyfield Commerce Center contains
248,000 rentable square feet and is 100% leased.
Dispositions
------------
On September 28, 2001 WRIT sold its 10400 Connecticut Avenue office building in
Kensington, Maryland for $8.4 million, resulting in a $4.3 million gain.
Built in 1965, the property contained approximately 65,356 square feet of office
space and had been in the WRIT portfolio since 1979.
Capital Improvements Summary
----------------------------
During Q3 2001, WRIT invested $3.5 million in real estate capital improvements.
A breakdown of these improvements is as follows (in $000's):
Accretive Capital Improvements
Acquisition Related $ 1,111
Tenant Improvements 820
-------
Total Accretive Capital Improvements 1,931
Recurring Capital Improvements 1,554
-------
Total Capital Improvements $ 3,485
Leasing Commissions Capitalized $ 182
September 30, 2001 Debt Summary
-------------------------------
At September 30, 2001, WRIT's debt was as follows (in $millions):
Weighted Avg Weighted Avg
Amount Maturity (Yrs) Interest Rate
------ -------------- -------------
Secured $ 85.6 6.1 7.5%
Senior Notes & MTN's $ 265.0 8.4 7.4%
-------------- ------------- ---------------
Subtotal $ 350.6 8.4 7.4%
Line of Credit* $ - -
-------------- ------------- ---------------
Total Debt $ 350.6 7.8 7.4%
* WRIT's Lines of Credit total $75 million of capacity at LIBOR +70bp.
No more than $60 million of debt matures in any one year and less than $1
million matures in each year until 2003.
Washington Real Estate Investment Trust
Q3 2001 Supplemental Disclosures
Page 8 of 8
Supplemental Debt Information at September 30, 2001
---------------------------------------------------
Debt to Total Market Capitalization: 27.6%
Earnings to Fixed Charges Ratio: 3.73x
Debt Service Coverage Ratio: 3.73x
REIT Industry Issues
--------------------
In light of recent issues raised in the REIT industry, WRIT makes the following
disclosures:
1. WRIT has no non-income producing land held for development and no
construction in process.
2. WRIT has only one theatre lease in its portfolio. This lease runs
through 6/30/02 at rent that WRIT estimates to be less than 1/3 of
current market rent.
3. WRIT has no capital investments in technology ventures or companies.
Conference Call Information
---------------------------
WRIT will conduct a Conference Call to discuss 3/rd/ Quarter Earnings on
Tuesday, November 6, 2001 at 11:00 A.M. Eastern Time. Conference Call access
information is as follows:
USA Toll Free Number: 888-577-8990
International Toll Number: 712-257-2273
Pass Code: Washington REIT
Leader: Ms. Laura Franklin
The replay of the Conference Call will be available for two weeks, commencing
one hour after the Conference Call and concluding on November 20, 2001 at 5:00
PM Eastern Time. Instant Replay access information is as follows:
USA Toll Free Number: 800-964-3296
International Toll Number: 402-998-0966
The live on-demand webcast of the Conference Call will also be available on
WRIT's website at www.writ.com. The on-line playback of the webcast will be
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available at www.writ.com for 30 days following the Conference Call.
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