SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) OCTOBER 17, 1997
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WASHINGTON REAL ESTATE INVESTMENT TRUST
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(Exact name of registrant as specified in its charter)
Maryland 1-6622 53-0261100
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification Number)
10400 Connecticut Avenue, Kensington, Maryland 20895
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 929-5900
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 17, 1997 WRIT Limited Partnership, a 99% owned subsidiary of
Washington Real Estate Investment Trust ("WRIT"), purchased 1600 Wilson
Boulevard office building ("1600 Wilson Boulevard" or the "Property") containing
165,286 rentable square feet located in Rosslyn, Virginia from the Boeing
Pension Fund, for a contract purchase price of $23,300,000. The contract
purchase price was paid from a portion of the proceeds of WRIT's public sale of
3,750,000 shares of beneficial interest on August 1, 1997. On the date of
acquisition, the Property was 97.4% leased. Major tenants of the Property
include Red Hot & Blue, Partnership for Child Health Care, GSA - Department of
Defense, Volunteers in Technical Assistance, Pasha Publications, Inc. and
Airlines Reporting Corporation.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The acquisition on October 17, 1997 of 1600 Wilson Boulevard when
aggregated with a previously reported acquisition completed on
February 28, 1997, constitutes the acquisition of a "significant
amount of assets" as defined in Regulation S-X. The following
financial statements for a substantial majority of the assets acquired
are filed as an exhibit hereto:
1. 1600 Wilson Boulevard - Audited Historical Summary of Gross
Income and Direct Operating Expenses for the year ended December
31, 1996.
In acquiring 1600 Wilson Boulevard, WRIT evaluated among other things,
sources of revenue (including but not limited to, competition in the
rental market, comparative rents and occupancy rates) and expenses
(including but not limited to, utility rates, ad valorem tax rates,
maintenance expenses and anticipated capital expenditures). WRIT,
after reasonable inquiry, is not aware of any material factors
relating to 1600 Wilson Boulevard that would cause the reported
information not to be necessarily indicative of future operating
results.
(b) Pro Forma Financial Information
The following pro forma financial statements for a substantial
majority of the assets acquired are filed as an exhibit hereto:
1. WRIT Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of June 30, 1997 and the Condensed and Consolidated Statement of
Operations for the year ended December 31,1996 and the six months
ended June 30, 1997.
(c) Exhibits
23. Consent of Auditors
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
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(Registrant)
By:
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(Signature)
Laura M. Franklin
Vice President &
Chief Accounting Officer
October 31, 1997
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(Date)
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
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(Registrant)
By: /s/ Laura M. Franklin
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(Signature)
Laura M. Franklin
Vice President &
Chief Accounting Officer
October 31, 1997
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(Date)
WASHINGTON REAL ESTATE INVESTMENT TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND
CONDENSED AND CONSOLIDATED STATEMENT OF OPERATIONS
The pro forma balance sheet as of June 30, 1997 presents combined financial
information as if the acquisition of 1600 Wilson Boulevard had taken place on
June 30, 1997. The pro forma statements of operations for the year ended
December 31, 1996 and the six months ended June 30, 1997 present combined
financial information as if the acquisition of 1600 Wilson Boulevard had taken
place as of January 1, 1996. WRIT purchased 1600 Wilson Boulevard on October 17,
1997.
The pro forma statements of operations show earnings in the amount of
$31,984 and $15,941 for the year ended December 31, 1996 and the six months
ended June 30, 1997, respectively, after giving effect to certain pro forma
adjustments required to reflect the operating results as if the Property had
been acquired by WRIT as of the beginning of 1996.
PRO FORMA BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO
FORMA PRO
REGISTRANT ADJ'S FORMA
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Assets
Real estate at cost............................................ $ 372,962 (1) $ 23,300 $ 396,262
Accumulated depreciation....................................... (51,377) -- (51,377)
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321,585 23,300 344,885
Mortgage note receivable......................................... 797 -- 797
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Total Investment in Real Estate............................ 322,382 23,300 345,682
Cash and temporary investments, receivables, prepaid expenses and
other assets................................................... 12,436 (1)(2)(3) 23,856 36,292
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$ 334,818 $ 47,156 $ 381,974
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Liabilities
Senior notes payable........................................... $ 100,000 -- $ 100,000
Mortgage note payable.......................................... 7,527 -- 7,527
Lines of credit payable........................................ 23,000 (3) (13,732) 9,268
Accounts payable and other liabilities......................... 8,259 -- 8,259
Tenant security deposits....................................... 2,738 -- 2,738
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141,524 (13,732) 127,792
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Shareholders' Equity
Shares of beneficial interest, $0.01 par value, 100,000,000
authorized, 31,827,844 issued and outstanding at June 30,
1997 and 35,577,844 issued and outstanding as adjusted......... 318 (2) 38 356
Additional paid-in capital..................................... 192,976 (2) 60,850 253,826
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193,294 60,888 254,182
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$ 334,818 $ 47,156 $ 381,974
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(1) Adjustment to reflect contract purchase price of $23,300 funded from the
proceeds of the August 1, 1997 equity offering .
(2) Adjustment to reflect proceeds of $60,888 from the August 1, 1997 equity
offering.
(3) Adjustment to reflect repayment of short term line of credit from proceeds
of the August 1, 1997 equity offering.
WASHINGTON REAL ESTATE INVESTMENT TRUST
PRO FORMA CONDENSED AND CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO
1600 WILSON FORMA PRO
REGISTRANT BOULEVARD ADJ'S FORMA
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Real estate revenue..................................... $ 65,541 $ 3,723 $ -- $ 69,264
Real estate expenses.................................... (21,932) (1,153) (1) (111) (23,196)
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43,609 2,570 (111) 46,068
Depreciation............................................ (7,784) -- (2) (544) (8,328)
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Income from real estate................................. 35,825 2,570 (655) 37,740
Other income (expense)
Investment income..................................... 708 -- (3) 2,105 2,813
Interest expense...................................... (5,474) -- -- (5,474)
General and administrative............................ (3,095) -- -- (3,095)
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Net income.............................................. $ 27,964 $ 2,570 $ 1,450 $ 31,984
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Net income per share.................................... $0.88 $0.90
Weighted average number of shares....................... 31,761,896 (4) 3,750,000 35,511,896
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(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) Investment income generated from the investment of the proceeds of the
August 1, 1997 equity offering.
(4) Represents the number of shares issued in connection with the August 1, 1997
equity offering.
WASHINGTON REAL ESTATE INVESTMENT TRUST
PRO FORMA CONDENSED AND CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO
1600 WILSON FORMA PRO
REGISTRANT BOULEVARD ADJ'S FORMA
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Real estate revenue..................................... $ 37,602 $ 1,642 $ -- $ 39,244
Real estate expenses.................................... (12,132) (635) (1) (49) (12,816)
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25,470 1,007 (49) 26,428
Depreciation............................................ (4,987) -- (2) (272) (5,259)
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Income from real estate................................. 20,483 1,007 (321) 21,169
Other income (expense)
Investment income..................................... 227 -- (3) 796 1,023
Interest expense...................................... (4,586) -- (4) 291 (4,295)
General and administrative............................ (1,956) -- -- (1,956)
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Net income.............................................. $ 14,168 $ 1,007 $ 766 $ 15,941
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Net income per share.................................... $ 0.45 $ 0.45
Weighted average number of shares....................... 31,824,782 (5) 3,750,000 35,574,782
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(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) Investment income generated from the investment of the proceeds of the
August 1, 1997 equity offering.
(4) Reduction in interest expense that would have occurred had the funds from
the August 1, 1997 equity offering been available at the time of the
purchase of two properties in February 1997 that are immaterial individually
and in the aggregate to WRIT's financial statements.
(5) Represents the number of shares issued in connection with the August 1, 1997
equity offering.
1600 WILSON BOULEVARD
C O N T E N T S
Page
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Independent Auditors' Report F-1
Historical Summary of Gross Income and Direct Operating Expenses F-2
Notes to Historical Summary of Gross Income and Direct Operating Expenses F-3
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 1600 Wilson Boulevard ("Historical Summary") for the year
ended December 31, 1996. 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 1600 Wilson Boulevard for the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
STOY, MALONE & COMPANY, P.C.
Bethesda, Maryland
October 17, 1997
F-1
1600 WILSON BOULEVARD
HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
Gross income:
Base rents................................................................... $3,267,422
Parking...................................................................... 329,407
Operating expense recoveries................................................. 116,963
Other........................................................................ 9,458
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Total gross income...................................................... $3,723,250
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Direct operating expenses:
Utilities.................................................................... $ 383,372
Repairs and maintenance...................................................... 341,015
Real estate taxes............................................................ 224,046
Cleaning..................................................................... 136,501
Security..................................................................... 32,602
Insurance.................................................................... 19,259
Taxes--other................................................................. 15,773
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Total direct operating expenses......................................... $1,152,568
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The Notes to Historical Summary of Gross Income and Direct Operating Expenses
are an integral part of this summary.
F-2
1600 WILSON BOULEVARD
NOTES TO HISTORICAL SUMMARY OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
NOTE 1 - NATURE OF BUSINESS:
1600 Wilson Boulevard is an office building located in Arlington, Virginia
containing approximately 165,000 rentable square feet.
The operations of 1600 Wilson Boulevard consist of leasing commercial office
space to various tenants. All of the leases provide for operating expense
recoveries. Only a few leases provide for adjustments to rent based on
increases in the consumer price index ("CPI"). There were no significant rent
adjustments based on increases in the CPI for 1996.
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 in effect as of December 31, 1996.
1997 $2,787,032
1998 2,318,088
1999 2,128,772
2000 1,903,938
2001 1,544,840
Thereafter 2,030,535
During the year ended December 31, 1996, one tenant accounted for approximately
15% of the base rents.
NOTE 2 - BASIS OF PRESENTATION:
Washington Real Estate Investment Trust purchased 1600 Wilson Boulevard on
October 17, 1997. The 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 1600 Wilson Boulevard, exclusive of the following expenses
which may not be comparable to the proposed future operations:
(a) Interest expense on existing mortgages and borrowings
(b) Depreciation of property and equipment
(c) Management and leasing fees
(d) Certain corporate expenses
(e) Provisions for income taxes
F-3