NEWS RELEASE WRIT Washington Real Estate Investment Trust CONTACT: 6110 Executive Boulevard Listed: NYSE Marie Donohue Suite 800 Trading Symbol: WRE Executive Assistant Rockville, MD 20852 Newspaper Quote: WRIT Direct Dial: 301-255-0802 Tel 301-984-9400 www.writ.com E-Mail: mdonohue@writ.com Fax 301-984-9610 ------------ ----------------- FOR IMMEDIATE RELEASE February 21, 2002 Page 1 of 8
WASHINGTON REAL ESTATE INVESTMENT TRUST 2001 EPS Up 9.5%, FFO Per Share Up 9.5% Washington Real Estate Investment Trust (WRIT) reported the following results today: 2001 2000 % Change ---- ---- -------- Earnings Per Share $ 1.38 $ 1.26 9.5% Funds from Operations Per Share $ 1.96 $ 1.79 9.5% Funds Available for Distribution Per Share $ 1.55 $ 1.24 25.0%
(Details regarding the above amounts are contained in the following pages. All amounts are fully diluted per share amounts.) Edmund B. Cronin, Jr. Chairman, President and CEO, stated, "Though the economy continues to weaken WRIT has been able to weather the storm and produce relatively strong growth." He also noted, "WRIT has no off balance sheet investments or commitments for real estate, high technology or any other type of venture. Furthermore, WRIT is not exposed to any speculative development risks." 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 and 9 multifamily properties. WRIT's streak of 36 consecutive years of increased earnings per share and 29 consecutive FFO per share growth spans 4 recessions. WRITS's dividends have increased every year for 32 consecutive years. During these 32 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 included, 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 WASHINGTON REAL ESTATE INVESTMENT TRUST FINANCIAL HIGHLIGHTS (In thousands, except per share data)
Quarter Ended December 31, Twelve Months Ended December 31, OPERATING RESULTS 2001 2000 2001 2000 - ----------------------------------------------- ---------- ---------- ----------- ---------- Real estate rental revenue $ 37,807 $ 35,211 $ 148,424 $ 134,732 Real estate expenses (10,343) (9,636) (42,147) (38,316) ----------- ------------ ------------- ------------- 27,464 25,575 106,277 96,416 Real estate depreciation and amortization (7,041) (5,833) (26,735) (22,723) ----------- ------------ ------------- ------------- Income from real estate 20,423 19,742 79,542 73,693 Other income 435 264 1,686 943 Interest expense (6,893) (6,735) (27,071) (25,531) General and administrative (1,559) (1,774) (6,100) (7,533) ----------- ------------ ------------- ------------- Income before gain on sale of real estate 12,406 11,497 48,057 41,572 Gain on sale of real estate - - 4,296 3,567 ----------- ------------ ------------- ------------- Net Income 12,406 11,497 52,353 45,139 =========== ============ ============= ============= Gain on Sale of Real Estate - - (4,296) (3,567) Divestiture Sharing Distribution - - (537) - Real estate depreciation and amortization 7,041 5,833 26,735 22,723 ----------- ------------ ------------- ------------- Funds From Operations 19,447 17,330 74,255 64,295 =========== ============ ============= ============= Tenant Improvements (578) (1,323) (3,186) (6,342) Recurring Capital Improvements (2,676) (2,156) (7,011) (7,402) Leasing Commissions Capitalized (306) (330) (1,001) (2,087) Acquisition Capital Improvements (1,547) (570) (3,528) (1,950) Expansions (794) - (794) (1,147) Straight Line Rents, Net of Reserve (550) (670) (2,352) (2,469) Non Real Estate Depreciation & Amortization 449 436 1,789 1,723 Divestiture Sharing Distribution - - 537 - ----------- ------------ ------------- ------------- Funds Available for Distribution $ 13,445 $ $12,717 $ 58,709 $ 44,621 =========== ============ ============= ============= Per Share Data - --------------- Income before gain on real estate (Basic) $0.32 $0.32 $1.28 $1.16 (Diluted) $0.32 $0.32 $1.27 $1.16 Net Income (Basic) $0.32 $0.32 $1.39 $1.26 (Diluted) $0.32 $0.32 $1.38 $1.26 Funds From Operations (Basic) $0.50 $0.48 $1.97 $1.80 (Diluted) $0.50 $0.48 $1.96 $1.79 Funds Available for Distribution (Basic) $0.35 $0.36 $1.56 $1.25 (Diluted) $0.34 $0.35 $1.55 $1.24 Dividends paid $0.3325 $0.3125 $1.3100 $1.2300 Weighted average shares outstanding 38,748,217 35,736,723 37,673,693 35,734,530 Fully diluted weighted average shares outstanding 39,056,824 36,027,658 37,950,613 35,872,366
Washington Real Estate Investment Trust Q4 2001 Supplemental Disclosures Page 3 of 8 WASHINGTON REAL ESTATE INVESTMENT TRUST CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
December 31, December 31, 2001 2000 ------------ ------------ Assets Real estate, at cost $774,586 $698,513 Accumulated depreciation (122,625) (100,906) ------------ ------------ Total investment in real estate, net 651,961 597,607 Cash and cash equivalents 26,441 6,426 Rents and other receivables, net of allowance for doubtful accounts of $1,993 and $1,743, respectively 10,523 9,795 Prepaid expenses and other assets 19,010 19,587 ------------ ------------ Total Assets $707,935 $633,415 ============ ============ Liabilities Accounts payable and other liabilities $13,239 $13,048 Advance rents 3,604 3,269 Tenant security deposits 6,148 5,624 Mortgage notes payable 94,726 86,260 Notes payable 265,000 265,000 ------------ ------------ Total Liabilities 382,717 373,201 ------------ ------------ Minority interest 1,611 1,558 ------------ ------------ Shareholders' Equity Shares of beneficial interest, $.01 par value; 100,000 shares authorized: 38,829 and 35,740 shares issued and outstanding, respectively 388 357 Additional paid-in capital 323,219 258,299 ------------ ------------ Total Shareholders' Equity 323,607 258,656 ------------ ------------ Total Liabilities and Shareholders' Equity $707,935 $633,415 ------------ ------------
Washington Real Estate Investment Trust Q4 2001 Supplemental Disclosures Page 4 of 8 WRIT's FFO Per Share Growth has averaged 230 basis points greater than the REIT - ------------------------------------------------------------------------------- Industry average over the last 5 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 outperform the industry. WRIT REIT INDUSTRY* ---- ------------- Q4 2000 6.7% 7.5% Q1 2000 11.9% 6.9% Q2 2001 11.4% 5.7% Q3 2001 8.7% 5.1% Q4 2001 4.2% N/A Average 8.6% 6.3% * REIT industry data for Q4 2000 - Q3 2001 is actual FFO per share growth per Credit Suisse First Boston Equity REIT Research. Q4 2001 industry date is not yet available and, therefore, the industry average is the average over Q4 2000 - Q3 2001. Core Portfolio Operating Income (NOI) Growth and Rental Rate Growth - Q4 2001 - ----------------------------------------------------------------------------- vs. Q4 2000 - -----------
Including Straight Line Rents Excluding Straight Line Rents ----------------------------- ----------------------------- Rental Rate Rental Rate Sector NOI Growth Growth NOI Growth Growth ------ ---------- ------ ---------- ------ Multifamily 0.6% 5.9% 0.6% 5.9% Office Buildings 2.7% 4.7% 3.8% 6.3% Retail Centers 5.9% 12.0% 4.8% 11.8% Industrial Centers 2.9% 0.5% 1.7% 0.5% ---- ---- ---- ---- Overall Core Portfolio 2.8% 5.3% 3.0% 6.1%
Core portfolio operating expenses increased 1.8% in Q4 2001 vs Q4 2000. Washington Real Estate Investment Trust Q4 2001 Supplemental Disclosures Page 5 of 8 Core Portfolio & Overall Occupancy Levels by Sector - ---------------------------------------------------
Core Portfolio All Properties -------------- -------------- 4th QTR 4th QTR 4th QTR 4th QTR Sector 2001 2000 2001 2000 ---- ---- ---- ---- Multifamily 93.7% 96.1% 93.7% 96.1% Office Buildings 96.0% 97.7% 96.4% 97.5% Retail Centers 96.3% 97.3% 96.3% 97.3% Industrial Centers 95.6% 98.1% 96.0% 98.1% ----- ----- ----- ----- Overall Portfolio 95.5% 97.4% 95.8% 97.3%
WRIT's Core Portfolio NOI Growth has averaged 110 basis points greater than the - ------------------------------------------------------------------------------- REIT Industry average over the last 5 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 outperform the industry. WRIT REIT INDUSTRY* ---- ------------- Q4 2000 8.2% 6.8% Q1 2001 8.7% 6.1% Q2 2001 8.2% 5.9% Q3 2001 6.5% 4.3% Q4 2001 2.8% N/A Average 6.9% 5.8% *REIT Industry Same Store NOI growth data is per Salomon Smith Barney Equity REIT Research. Q4 2001 industry data is not yet available and, therefore, the industry average is the average over Q4 2000-Q3 2001. Washington Real Estate Investment Trust Q4 Supplemental Disclosures Page 6 of 8 Straight-line Rents - ------------------- The following disclosure is provided to improve comparability between Q4 2001 and prior quarters (all amounts except per share amounts are in $000's):
Including Straight Line Rents Excluding Straight Line Rents ----------------------------- ----------------------------- 4th QTR 4th QTR 4th QTR 4th QTR 2001 2000 2001 2000 ---- ---- ---- ---- Straight Line Rent, Net $ 550 $ 670 N/A N/A FFO $ 19,447 $ 17,330 $ 18,897 $ 16,660 FFO Per Share $ 0.498 $ 0.481 $ 0.484 $ 0.462 FFO Per Share Growth - Nominal 3.51% 4.63% FFO Per Share Growth - Rounded 4.17% 4.35% Core Portfolio Operating Income (NOI) Growth 2.8% 3.0%
Q4 2001 Commercial Leasing Activity - ----------------------------------- In Q4 2001, WRIT executed leases for 362,000 square feet of commercial space at a weighted average increase over the prior rent in place of 33.1% on a cash basis and 40.9% 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 189,556 $ 22.76 $ 27.94 22.8% 28.4% Retail * 66,307 3.75 13.93 271.8% 319.4% Industrial 106,089 7.94 9.17 15.4% 22.7% -------- ------- ------- ------- ------- Overall 361,952 $ 14.93 $ 19.87 33.1% 40.9%
Avg Term Avg Tenant Sector Years Imp/SF ------ ----- ------ Office 5.0 $ 6.96 Retail 14 - Industrial 2.2 0.23 ------- -------- Overall 6.0 $ 3.71 Washington Real Estate Investment Trust Q4 2001 Supplemental Disclosures Page 7 of 8 Acquisitions - ------------ On November 1, 2001 WRIT acquired Sullyfield Commercial 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 - ------------ There were no dispositions for the quarter ended December 31, 2001. Capital Improvements Summary - ---------------------------- During Q4 2001, WRIT invested $5.6 million in real estate capital improvements. A breakdown of these improvements is as follows (in $000's): Accretive Capital Improvements Acquisition Related $ 1,547 Expansions 794 Tenant Improvements 578 ---------- Total Accretive Capital Improvements 2,919 Recurring Capital Improvements 2,676 ---------- Total Capital Improvements $ 5,595 Leasing Commissions Capitalized $ 306
December 31, 2001 Debt Summary - ------------------------------ At December 31, 2001, WRIT's debt was as follows (in $millions):
Weighted Avg Weighted Avg Amount Maturity (Yrs) Interest Rate ------ -------------- -------------- Secured $ 94.7 5.8 6.8% Senior Notes & MTN's $ 265.0 8.1 7.4% ------- Subtotal $ 359.7 Line of Credit* $ - - ------- ------- ------ Total Debt and Total Weighted Average $ 359.7 7.5 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 Q4 2001 Supplemental Disclosures Page 8 of 8 Supplemental Debt Information at December 31, 2001 - -------------------------------------------------- Debt to Total Market Capitalization: 27.0% Earnings to Fixed Charges: 3.67x Debt Service Coverage Ratio: 3.67x 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 speculative 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, nor any other off balance sheet activities. Conference Call Information - --------------------------- WRIT will conduct a Conference Call to discuss 4th Quarter Earnings on Friday, February 22, 2002 at 11:00 AM, Eastern Time. Conference call access information is as follows: USA Toll Free Number: 888-780-9649 International Toll Number: 212-547-0410 Pass Code: Washington REIT Leader: Sara Grootwassink The replay of the Conference Call will be available for two weeks, commencing one hour after the Conference Call and concluding on March 8, 2002 at 5:00 PM Eastern Time. Instant Replay access information is as follows: USA Toll Free Number: 800-839-4838 International Toll Number: 402-220-5089 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 ------------ available at www.writ.com for 30 days following the Conference Call. ------------