SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) August 22, 1995 ------------------------------ WASHINGTON REAL ESTATE INVESTMENT TRUST - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) District of Columbia 1-6622 53-0261100 - ---------------------------------------------------------------------------------------------------- (State or other jurisdiction of (Commission File (IRS Employer incorporation) Number) Identification Number) 10400 Connecticut Avenue, Kensington, Maryland 20895 - ---------------------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 929-5900 ------------------------------ ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On August 22, 1995 Washington Real Estate Investment Trust (WRIT) purchased Frederick County Square, a 233,000 square foot shopping center located on West Patrick Street (U.S. Route 40) in Frederick, Maryland from Noro-Frederick Square Holdings, B.V., for a purchase price of $13,350,000. As part of the purchase price, WRIT assumed an existing mortgage of approximately $7,752,000, bearing interest at 9% and maturing on January 1, 2003. The cash portion of the purchase price was paid out of working capital, which includes the net proceeds of WRIT's recent public offering. On date of acquisition, the center was 100% leased to 23 tenants and is anchored by K-Mart, MJ Designs, F&M Drugs and Jo-Ann Fabrics. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired The acquisition, when aggregated with previously reported acquisitions completed on January 26, 1995 and May 17, 1995, constitutes the acquisition of a "significant amount of assets" as defined in regulation S-X. Financial statements for a substantial majority of the assets acquired are as follows: 1. 6110 Executive Boulevard - Audited Historical Summary of Gross Income and Direct Operating Expenses for the year ended December 31, 1994. 2. Norconcord Limited Partnership (Tech 100 Industrial Park) - Audited Statement of Operations (not including management, interest, depreciation and amortization expenses) for the year ended December 31, 1994. (b) Pro Forma Financial Information - reported for 6110 Executive Boulevard and Norconcord Limited Partnership (Tech 100 Industrial Park) is per the attached pages 4 and 5, respectively. (c) Exhibits - none SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WASHINGTON REAL ESTATE INVESTMENT TRUST --------------------------------------- (Registrant) By: /s/ Laura M. Franklin --------------------------------------- (Signature) Laura M. Franklin Vice President and Chief Accounting Officer November 6, 1995 - ------------------------------------------- (Date) WASHINGTON REAL ESTATE INVESTMENT TRUST PRO FORMA CONDENSED BALANCE SHEET AND STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 The pro forma Balance Sheet of December 31, 1994 presents combined financial information as if these acquisitions had taken place as of December 31, 1994. The pro forma Statement of Operations for the year ended December 31, 1994 presents combined financial information as if these acquisitions had taken place as of January 1, 1994. WRIT purchased 6110 Executive Boulevard on January 26, 1995 and Tech 100 Industrial Park on May 17,1995. The pro forma Statement of Operations shows higher earnings in the amount of $729,922 due to certain pro forma adjustments required to reflect the operating results as if both properties had been acquired at the beginning of 1994. These adjustments reflect higher pro forma operating income on the acquired properties compared to the pro forma average cost of interest of 6.7% on the $23,000,000 of borrowed funds and the reduction in investment income used in the acquisition of 6110 Executive Boulevard. PRO FORMA BALANCE SHEET DECEMBER 31, 1994
PRO FORMA PRO REGISTRANT ADJ'S FORMA ---------- ------------ ------------- Assets Real estate at cost $206,377,733 (1) 23,346,145 229,723,878 Accumulated depreciation (36,588,540) (36,588,540) ------------- ------------ ------------- 169,789,193 23,346,145 193,135,338 Mortgage note receivable 800,000 800,000 ------------- ------------ ------------- Total Investment in Real Estate 170,589,193 23,346,145 193,935,338 Cash and cash equivalents, receivables, prepaid expenses and other assets 6,782,127 (1) 157,535 6,939,662 Marketable investment securities 1,434,790 (1) (346,145) 1,088,645 ------------- ------------ ------------- $178,806,110 $23,157,535 $201,963,645 ============= ============ ============= Liabilities Line of credit payable 18,000,000 (1) 23,000,000 41,000,000 Accounts payable and other liabilities 4,629,248 4,629,248 Tenant security deposits 1,517,762 (1) 157,535 1,675,297 ------------- ------------ ------------- $24,147,010 23,157,535 47,304,545 Shareholders' Equity Shares of beneficial interest, unlimited authorization, without par value 139,340,435 139,340,435 Undistributed gains on real estate dispositions 15,318,665 15,318,665 ------------- ------------ ------------- 154,659,100 154,659,100 ------------- ------------ ------------- $178,806,110 $23,157,535 $201,963,645 ============= ============ =============
(1) Adjustment to reflect 6110 Executive Boulevard purchase cost of $16,516,213 funded with $516,213 of marketable securities proceeds and $16,000,000 of short term debt and further adjusted to reflect Tech 100 purchase cost of $6,829,932 funded with $7,000,000 of short term debt. WASHINGTON REAL ESTATE INVESTMENT TRUST PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994
PRO 6110 FORMA PRO REGISTRANT EXEC. BLVD. TECH 100 ADJ'S FORMA ---------- ----------- -------- ----- ----- Real Estate Revenue $45,511,482 $3,190,048 $1,001,480 49,703,010 Real Estate Expenses (14,030,844) (1,305,934) (177,226) (1) (82,468) (15,596,472) -------------- ------------- ------------- ----------- -------------- 31,480,638 1,884,114 824,254 (82,468) 34,106,538 Depreciation (3,978,301) (2) (277,314) (4,255,615) -------------- ------------- ------------- ----------- -------------- Income From Real Estate 27,502,337 1,884,114 824,254 (359,782) 29,850,923 Other Income (Expense) Investment Income (550,276) (3) (15,403) (565,679) Interest Expense (614,162) (4) (1,603,261) (2,217,423) General and Administrative (3,215,659) (3,215,659) -------------- ------------- ------------- ------------ -------------- Net Income $23,122,240 $1,884,114 $824,254 ($1,978,446) $23,852,162 ============== ============= ============= ============ ============== Net Income Per Share 0.82 0.84 Weighted Average Number of Shares 28,239,420 28,239,420
(1) Property Management Fees based on rate schedule paid by Registrant. (2) Depreciation over 30 years, based upon the portion of the puchase price allocated to building and improvements. (3) Reduction of Investment Income attibutable to $516,000 portion of purchase cost funded with proceeds of Registrant's marketable securities for the acquisition of 6110 Executive Boulevard and excess proceeds of $170,000 from borrowings for the acquisition of Tech 100. In summary, a net reduction in marketable securities of $346,000. In 1994, the Registrant's effective rate of interest on marketable investment securities was approximately 4.45%. (4) Interest expense of $1,153,511 based on Registrant's borrowing at prime of 9% for 67 days and 6.8% thereafter, on $16,000,000 borrowed for the acquisition of 6110 Executive Boulevard. Interest expense of $449,750 at the Registrant's rate of 6.425% on $7,000,000 borrowed for the acquisition of Tech 100 for a total interest expense of $1,603,261. Note: The above statement does not give effect to the July 18, 1995 Underwriting of the Registrant of which, a portion of the proceeds were used to repay a portion of the $23,000,000 of borrowings used to finance the above acquisitions. 6110 EXECUTIVE BOULEVARD CONTENTS
Page ---- Independent Auditors' Report 1 Historical Summary of Gross Income and Direct Operating Expenses 2 Notes to Historical Summary of Gross Income and Direct Operating Expenses 3
[STOY-MALONE LOGO] Stoy, Malone & Company, P.C. Certified Public Accountants Independent Auditors' Report To the Board of Trustees of Washington Real Estate Investment Trust We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses of 6110 Executive Boulevard ("Historical Summary") for the year ended December 31, 1994. This Historical Summary is the responsibility of the Building's management. Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion. The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 2, and is not intended to be a complete presentation of the Building's revenue and expenses. In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in Note 2 of 6110 Executive Boulevard for the year ended December 31, 1994, in conformity with generally accepted accounting principles. /s/ STOY, MALONE & COMPANY, P.C. - -------------------------------- STOY, MALONE & COMPANY, P.C. Bethesda, Maryland October 11, 1995 1 6110 EXECUTIVE BOULEVARD HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES Year Ended December 31, 1994 Gross income: Base rent $ 2,806,168 Expense recoveries 119,517 Parking 228,161 Other 36,202 ----------- Total gross income $ 3,190,048 =========== Direct operating expenses: Administrative 84,762 Cleaning 190,575 Grounds maintenance 32,248 Insurance 14,548 Real estate taxes 177,056 Repairs and maintenance 372,362 Security 12,213 Utilities 420,820 Other 1,350 ----------- Total direct operating expenses $ 1,305,934 ===========
The Notes to Historical Summary of Gross Income and Direct Operating Expenses are an Integral part of this summary. 2 6110 EXECUTIVE BOULEVARD NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES NOTE I - NATURE OF BUSINESS: 6110 Executive Boulevard (the "Building") is an office building located in Rockville, Maryland. The Building has approximately 198,000 square feet of rentable space. The Building's operations consist of leasing commercial office space to various tenants. Expense recoveries represent operating expenses, including real estate taxes, billed to the tenants and are recognized in the period the expenses are incurred. All leases are classified as operating leases and expire at various dates prior to 2005. The following is a schedule by years of future minimum rents receivable on noncancelable operating leases as of December 31, 1994: 1995 $2,778,877 1996 2,076,572 1997 1,848,221 1998 1,490,961 1999 1,024,202 Thereafter 454,851
During the year ended December 31, 1994, one tenant accounted for approximately 13% of the base rents recognized in the Historical Summary. NOTE 2 - BASIS OF PRESENTATION: Washington Real Estate Investment Trust purchased the Building in January, 1995. The accompanying Historical Summary has been prepared for the purpose of complying with Regulation S-X, Rule 3-14 of the Securities and Exchange Commission ("SEC"), which requires certain information with respect to real estate operations acquired to be included with certain filings with the SEC. This Historical Summary includes the historical gross income and direct operating expenses of the Building, exclusive of the following expenses which may not be comparable to the proposed future operations of the Building: (a) Interest expense on existing mortgages and borrowings (b) Depreciation of property and equipment (c) Management and leasing fees (d) Provisions for income taxes 3 NORCONCORD LIMITED PARTNERSHIP TECH 100 INDUSTRIAL PARK FINANCIAL STATEMENT DECEMBER 31, 1994 PAUL BROWNER, Chartered - Certified Public Accountants 932 HUNGERFORD DRIVE #17 ROCKVILLE, MD. 20850 301-340-3340 [PAUL BROWNER, CPA LETTERHEAD] October 18, 1995 Larry Finger Washington Real Estate Investment Trust 10400 Connecticut Ave, Kensington, MD 20895 INDEPENDENT AUDITOR'S REPORT We have audited the accompanying Statement of Operations (not including management, interest, depreciation and amortization) of NORCONCORD LIMITED PARTNERSHIP (TECH 100 INDUSTRIAL PARK) for the year ended December 31, 1994. These financial statements are the responsibility of the organization's ownership and management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the owners and management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations (not including management, interest, depreciation and amortization) of the NORCONCORD LIMITED PARTNERSHIP (TECH 100 INDUSTRIAL PARK) for the year ended December 31, 1994, in conformity with generally accepted accounting principles. /s/ PAUL BROWNER, CHTD. ------------------------ Paul Browner, Chtd. NORCONCORD LIMITED PARTNERSHIP TECH 100 INDUSTRIAL PARK STATEMENT OF OPERATIONS (NOT INCLUDING MANAGEMENT, INTEREST, DEPRECIATION, AND AMORTIZATION EXPENSES) FOR THE YEAR ENDED DECEMBER 31, 1994 INCOME Rental-base 891,787 Rental-recoveries 102,114 Other 7,579 ----------- Total 1,001,480 EXPENSES Administrative 11,396 General 441 Insurance 15,255 Repairs and maintenance 33,809 Security 1,684 Taxes 76,133 Telephone 1,338 Utilities 37,170 ----------- Total 177,226 ----------- NET INCOME 824,254 ----------- (Not including Management, Interest, Depreciation and Amortization expenses)
See independent auditor's report See accompanying footnotes NORCONCORD LIMITED PARTNERSHIP TECH 100 INDUSTRIAL PARK FOOTNOTES TO FINANCIAL STATEMENT (NOT INCLUDING MANAGEMENT, INTEREST, DEPRECIATION, AND AMORTIZATION EXPENSES) FOR THE YEAR ENDED DECEMBER 31, 1994 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The partnership keeps its books and records, and prepares its financial statements and tax returns on the accrual basis of accounting. Tenant leases provide for a base rent plus a sharing of such expenses as real estate taxes, insurance, structural, common area maintenance and utilities. 2 NATURE OF BUSINESS The partnership owns and operates an Industrial Park in Howard County, Maryland. There are three, one-story buildings with 14 tenants and 167,267 square feet on 15.173 acres. 3 INCOME TAX No Federal or Maryland Income Tax is reflected on these financial statements as each partner is responsible for the tax on their share of taxable income.
See independent auditor's report