Exhibit 99.2
Supplemental Information
March 31, 2004
| Contact: |
6110 Executive Boulevard | |
| Sara Grootwassink |
Suite 800 | |
| Chief Financial Officer |
Rockville, MD 20852 | |
| Direct Dial: (301) 255-0820 |
(301) 984-9400 | |
| E-mail: sgrootwassink@writ.com |
(301) 984-9610 fax |
Washington Real Estate Investment Trust
Supplemental Information
Table of Contents
March 31, 2004
| Schedule |
Page | |
| About the Trust |
2 | |
| Consolidated Statements of Operations |
3 | |
| Consolidated Balance Sheets |
4 | |
| Funds From Operations and Funds Available for Distribution |
5 | |
| Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) |
6 | |
| Long-Term Debt Analysis |
7 | |
| Capital Analysis |
8 | |
| Core Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth |
9 | |
| Core Portfolio Net Operating Income (NOI) |
10 | |
| Core Portfolio & Overall Occupancy Levels by Sector |
11 | |
| Schedule of Properties |
12 | |
| Schedule of Properties (continued) |
13 | |
| Commercial Leasing Summary |
14 | |
| 10 Largest Tenants - Based on Annualized Base Rent |
15 | |
| Lease Expirations as of March 31, 2004 |
16 | |
| 2004 Acquisition Summary |
17 | |
| 12, 36 and 60 Month Total Returns Chart |
18 | |
| Reporting Definitions |
19 | |
Washington Real Estate Investment Trust
About the Trust
Mission Statement
Washington Real Estate Investment Trust, founded in 1960 and headquarted in Rockville, Maryland, invests in a diversified range of income-producing property types. Our purpose is to acquire and manage real estate investments in markets we know well and protect our assets from single property-type value fluctuations through diversified holdings. Our goal is to continue to safely increase earnings and shareholder value.
Company Background
We are a self-administered, self-managed, equity real estate investment trust investing in income-producing properties in the greater Washington-Baltimore region. We own a diversified portfolio of 67 properties consisting of 11 retail centers, 29 office properties, 18 industrial properties and 9 multifamily properties.
Our dividends have increased every year for 33 consecutive years and our Funds From Operations (“FFO”) per share has increased every year for 31 consecutive years. WRIT shares are publicly traded on the New York Stock Exchange (symbol: WRE).
Certain statements in the supplemental disclosures which follow 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.
2
Washington Real Estate Investment Trust
Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended |
||||||||||||||||||||
| OPERATING RESULTS |
03/31/04 |
12/31/03 |
09/30/03 |
06/30/03 |
03/31/03 |
|||||||||||||||
| Real estate rental revenue |
$ | 44,376 | $ | 43,854 | $ | 41,109 | $ | 39,481 | $ | 38,961 | ||||||||||
| Real estate expenses |
(13,463 | ) | (12,598 | ) | (12,426 | ) | (11,235 | ) | (11,603 | ) | ||||||||||
| 30,913 | 31,256 | 28,683 | 28,246 | 27,358 | ||||||||||||||||
| Real estate depreciation and amortization |
(9,872 | ) | (10,336 | ) | (9,101 | ) | (8,245 | ) | (8,073 | ) | ||||||||||
| Income from real estate |
21,041 | 20,920 | 19,582 | 20,001 | 19,285 | |||||||||||||||
| Other income |
65 | 72 | 102 | 132 | 108 | |||||||||||||||
| Interest expense |
(8,575 | ) | (8,011 | ) | (7,401 | ) | (7,581 | ) | (7,047 | ) | ||||||||||
| General and administrative |
(1,229 | ) | (1,583 | ) | (1,296 | ) | (1,264 | ) | (1,132 | ) | ||||||||||
| Net Income |
$ | 11,302 | $ | 11,398 | $ | 10,987 | $ | 11,288 | $ | 11,214 | ||||||||||
| Per Share Data |
||||||||||||||||||||
| Net Income |
$ | 0.27 | $ | 0.28 | $ | 0.28 | $ | 0.29 | $ | 0.28 | ||||||||||
| Fully diluted weighted average shares outstanding |
41,819,783 | 40,121,060 | 39,528,812 | 39,451,560 | 39,357,895 | |||||||||||||||
| Percentage of Revenues: |
||||||||||||||||||||
| Real estate expenses |
30.3 | % | 28.7 | % | 30.2 | % | 28.5 | % | 29.8 | % | ||||||||||
| General and administrative |
2.8 | % | 3.6 | % | 3.2 | % | 3.2 | % | 2.9 | % | ||||||||||
| Ratios: |
||||||||||||||||||||
| EBITDA / Interest Expense |
3.5 | x | 3.7 | x | 3.7 | x | 3.6 | x | 3.6 | x | ||||||||||
| Net income / Total revenue |
25.5 | % | 26.0 | % | 26.7 | % | 28.6 | % | 28.8 | % | ||||||||||
3
Washington Real Estate Investment Trust
Consolidated Balance Sheets
(In thousands)
| March 31, 2004 |
December 31, 2003 |
September 30, 2003 |
June 30, 2003 |
March 31, 2003 |
||||||||||||||||
| Assets |
||||||||||||||||||||
| Land |
$ | 212,136 | $ | 210,366 | $ | 203,878 | $ | 172,378 | $ | 171,514 | ||||||||||
| Building and improvements |
862,377 | 846,411 | 761,556 | 701,659 | 695,802 | |||||||||||||||
| Total real estate, at cost |
1,074,513 | 1,056,777 | 965,434 | 874,037 | 867,316 | |||||||||||||||
| Accumulated depreciation |
(187,147 | ) | (177,983 | ) | (168,524 | ) | (161,264 | ) | (154,004 | ) | ||||||||||
| Total investment in real estate, net |
887,366 | 878,794 | 796,910 | 712,773 | 713,312 | |||||||||||||||
| Cash and cash equivalents |
6,064 | 5,486 | 5,968 | 20,669 | 17,350 | |||||||||||||||
| Rents and other receivables, net of allowance for doubtful accounts |
19,362 | 18,397 | 17,266 | 15,967 | 14,822 | |||||||||||||||
| Prepaid expenses and other assets |
25,236 | 25,412 | 27,384 | 20,751 | 23,746 | |||||||||||||||
| Total Assets |
$ | 938,028 | $ | 928,089 | $ | 847,528 | $ | 770,160 | $ | 769,230 | ||||||||||
| Liabilities and Shareholders’ Equity |
||||||||||||||||||||
| Accounts payable and other liabilities |
$ | 17,532 | $ | 19,068 | $ | 14,749 | $ | 16,702 | $ | 13,189 | ||||||||||
| Advance rents |
5,757 | 5,322 | 4,833 | 5,071 | 5,440 | |||||||||||||||
| Tenant security deposits |
6,271 | 6,168 | 6,276 | 6,282 | 6,582 | |||||||||||||||
| Mortgage notes payable |
141,752 | 142,182 | 92,909 | 93,201 | 93,499 | |||||||||||||||
| Lines of credit/short-term note payable |
13,250 | — | 132,500 | — | — | |||||||||||||||
| Notes payable |
375,000 | 375,000 | 275,000 | 325,000 | 325,000 | |||||||||||||||
| Total Liabilities |
559,562 | 547,740 | 526,267 | 446,256 | 443,710 | |||||||||||||||
| Minority interest |
1,609 | 1,601 | 1,618 | 1,581 | 1,565 | |||||||||||||||
| Shareholders’ Equity |
||||||||||||||||||||
| Shares of beneficial interest, $.01 par value; 100,000 shares authorized |
$ | 418 | $ | 416 | $ | 394 | $ | 393 | $ | 392 | ||||||||||
| Additional paid-in capital |
400,582 | 396,462 | 332,261 | 330,808 | 329,134 | |||||||||||||||
| Distributions in excess of net income |
(20,528 | ) | (16,272 | ) | (12,171 | ) | (8,498 | ) | (5,152 | ) | ||||||||||
| Less: Deferred Compensation on restricted shares |
(3,615 | ) | (1,858 | ) | (841 | ) | (380 | ) | (419 | ) | ||||||||||
| Total Shareholders’ Equity |
376,857 | 378,748 | 319,643 | 322,323 | 323,955 | |||||||||||||||
| Total Liabilities and Shareholders’ Equity |
$ | 938,028 | $ | 928,089 | $ | 847,528 | $ | 770,160 | $ | 769,230 | ||||||||||
| Total Debt / Total Market Capitalization |
0.28:1 | 0.30:1 | 0.30:1 | 0.28:1 | 0.29:1 | |||||||||||||||
4
Washington Real Estate Investment Trust
Funds From Operations and Funds Available for Distribution
(In thousands, except per share data)
| Three Months Ended |
||||||||||||||||||||
| 03/31/04 |
12/31/03 |
09/30/03 |
06/30/03 |
03/31/03 |
||||||||||||||||
| Funds From Operations(1) |
||||||||||||||||||||
| Net Income |
$ | 11,302 | $ | 11,398 | $ | 10,987 | $ | 11,288 | $ | 11,214 | ||||||||||
| Real estate depreciation and amortization |
9,872 | 10,336 | 9,101 | 8,245 | 8,073 | |||||||||||||||
| Funds From Operations (FFO) |
21,174 | 21,734 | 20,088 | 19,533 | 19,287 | |||||||||||||||
| FFO per share - basic |
$ | 0.51 | $ | 0.55 | $ | 0.51 | $ | 0.50 | $ | 0.49 | ||||||||||
| FFO per share - fully diluted |
$ | 0.51 | $ | 0.54 | $ | 0.51 | $ | 0.50 | $ | 0.49 | ||||||||||
| Funds Available for Distribution(2) |
||||||||||||||||||||
| Accretive: |
||||||||||||||||||||
| Tenant Improvements (3) |
(2,792 | ) | (4,958 | ) | (1,239 | ) | (1,696 | ) | (1,613 | ) | ||||||||||
| Leasing Commissions Capitalized |
(633 | ) | (935 | ) | (1,515 | ) | (372 | ) | (1,419 | ) | ||||||||||
| Non-Accretive: |
||||||||||||||||||||
| Recurring Capital Improvements |
(1,428 | ) | (2,887 | ) | (1,277 | ) | (1,519 | ) | (865 | ) | ||||||||||
| Straight-Line Rent, Net |
(565 | ) | (395 | ) | (503 | ) | (473 | ) | (318 | ) | ||||||||||
| Non-real estate depreciation and amortization |
448 | 448 | 467 | 453 | 476 | |||||||||||||||
| Funds Available for Distribution (FAD) |
$ | 16,204 | $ | 13,007 | $ | 16,021 | $ | 15,926 | $ | 15,548 | ||||||||||
| Total Dividends Paid |
$ | 15,558 | $ | 15,499 | $ | 14,659 | $ | 14,634 | $ | 13,812 | ||||||||||
| Average shares - basic |
41,571,542 | 39,862,110 | 39,311,293 | 39,240,682 | 39,173,898 | |||||||||||||||
| Average shares - fully diluted |
41,819,783 | 40,121,060 | 39,528,812 | 39,451,560 | 39,357,895 | |||||||||||||||
| (1) | Funds From Operations (“FFO”) – The National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) defines FFO (April, 2002 White Paper) as net income (computed in accordance with generally accepted accounting principles (“GAAP”)) excluding gains (or losses) from sales of property plus real estate depreciation and amortization. We consider 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 diminish predictably over time. Since real estate values have instead historically risen or fallen with market conditions, we believe that FFO more accurately provides investors an indication of our ability to incur and service debt, make capital expenditures and fund other needs. |
| (2) | Funds Available for Distribution (“FAD”) is calculated by subtracting from FFO (1) recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream and (2) straight line rents, then adding non-real estate depreciation and amortization. FAD is included herein, because we consider it to be a measure of a REIT’s ability to incur and service debt and to distribute dividends to its shareholders. FAD is not a standardized measure, and may be calculated differently by other REITs. |
| (3) | Tenant improvements for the three months ended March 31, 2004 and December 31, 2003 include payments to one tenant of $1.1 million and $3.5 million, respectively. |
5
Washington Real Estate Investment Trust
Earnings Before Interest Taxes Depreciation and Amortization (EBITDA)
(In thousands)
| Three Months Ended |
||||||||||||||||||||
| 03/31/04 |
12/31/03 |
09/30/03 |
06/30/03 |
03/31/03 |
||||||||||||||||
| EBITDA(1) |
||||||||||||||||||||
| Net income |
$ | 11,302 | $ | 11,398 | $ | 10,987 | $ | 11,288 | $ | 11,214 | ||||||||||
| Add: |
||||||||||||||||||||
| Interest expense |
8,575 | 8,011 | 7,401 | 7,581 | 7,047 | |||||||||||||||
| Real estate depreciation and amortization |
9,872 | 10,336 | 9,101 | 8,245 | 8,073 | |||||||||||||||
| Non-real estate depreciation |
114 | 117 | 120 | 127 | 149 | |||||||||||||||
| Less: |
||||||||||||||||||||
| Other income |
(65 | ) | (72 | ) | (102 | ) | (132 | ) | (108 | ) | ||||||||||
| EBITDA |
$ | 29,798 | $ | 29,790 | $ | 27,507 | $ | 27,109 | $ | 26,375 | ||||||||||
| (1) | EBITDA is earnings before interest, taxes, depreciation and amortization. We consider EBITDA to be an appropriate supplemental performance measure because it eliminates depreciation, interest and the gain (loss) from property dispositions, which permits investors to view income from operations without the effect of non-cash depreciation or the cost of debt. |
6
Washington Real Estate Investment Trust
Long-Term Debt Analysis
(In thousands)
| March 31, 2004 |
December 31, 2003 |
September 30, 2003 |
June 30, 2003 |
March 31, 2003 |
||||||||||||||||
| Balances Outstanding |
||||||||||||||||||||
| Secured |
||||||||||||||||||||
| Conventional fixed rate |
$ | 141,752 | $ | 142,182 | $ | 92,909 | $ | 93,201 | $ | 93,499 | ||||||||||
| Secured total |
141,752 | 142,182 | 92,909 | 93,201 | 93,499 | |||||||||||||||
| Unsecured |
||||||||||||||||||||
| Fixed rate bonds and notes |
375,000 | 375,000 | 275,000 | 325,000 | 325,000 | |||||||||||||||
| Credit facilities |
13,250 | — | 132,500 | — | — | |||||||||||||||
| Unsecured total |
388,250 | 375,000 | 407,500 | 325,000 | 325,000 | |||||||||||||||
| Total |
$ | 530,002 | $ | 517,182 | $ | 500,409 | $ | 418,201 | $ | 418,499 | ||||||||||
| Average Interest Rates |
||||||||||||||||||||
| Secured |
||||||||||||||||||||
| Conventional fixed rate |
6.6 | % | 6.6 | % | 7.2 | % | 7.2 | % | 7.2 | % | ||||||||||
| Secured total |
6.6 | % | 6.6 | % | 7.2 | % | 7.2 | % | 7.2 | % | ||||||||||
| Unsecured |
||||||||||||||||||||
| Fixed rate bonds |
6.5 | % | 6.5 | % | 6.9 | % | 7.0 | % | 7.0 | % | ||||||||||
| Credit facilities |
1.8 | % | 0.0 | % | 1.8 | % | 0.0 | % | 0.0 | % | ||||||||||
| Unsecured total |
6.3 | % | 6.5 | % | 5.2 | % | 7.0 | % | 7.0 | % | ||||||||||
| Average |
6.4 | % | 6.5 | % | 5.6 | % | 7.0 | % | 7.0 | % | ||||||||||
Maturity Schedule
| Future Maturities of Debt |
Total Debt |
Average Interest Rate |
||||||||||
| Year |
Secured Debt |
Unsecured Debt |
||||||||||
| 2004 |
$ | 1,528 | $ | 68,250 | $ | 69,778 | 6.7 | % | ||||
| 2005 |
27,549 | — | 27,549 | 7.7 | % | |||||||
| 2006 |
7,388 | 50,000 | 57,388 | 7.3 | % | |||||||
| 2007 |
8,642 | — | 8,642 | 6.7 | % | |||||||
| 2008 |
834 | 60,000 | 60,834 | 6.7 | % | |||||||
| 2009 |
50,887 | — | 50,887 | 7.1 | % | |||||||
| 2010 |
937 | — | 937 | 5.4 | % | |||||||
| 2011 |
989 | — | 989 | 5.4 | % | |||||||
| 2012 |
1,037 | — | 1,037 | 5.4 | % | |||||||
| Thereafter |
41,961 | 210,000 | 251,961 | 5.7 | % | |||||||
| Total maturities |
$ | 141,752 | $ | 388,250 | $ | 530,002 | 6.4 | % | ||||
Weighted average maturity = 7.6 years
7
Washington Real Estate Investment Trust
Capital Analysis
(In thousands, except per share amounts)
| March 31, 2004 |
December 31, 2003 |
September 30, 2003 |
June 30, 2003 |
March 31, 2003 |
||||||||||||||||
| Market Data |
||||||||||||||||||||
| Shares Outstanding |
41,764 | 41,607 | 39,354 | 39,286 | 39,184 | |||||||||||||||
| Market Price per Share |
$ | 32.45 | $ | 29.20 | $ | 29.00 | $ | 27.20 | $ | 25.97 | ||||||||||
| Equity Market Capitalization |
$ | 1,355,242 | $ | 1,214,924 | $ | 1,141,266 | $ | 1,068,579 | $ | 1,017,608 | ||||||||||
| Total Debt |
$ | 530,002 | $ | 517,182 | $ | 500,409 | $ | 418,201 | $ | 418,499 | ||||||||||
| Total Market Capitalization |
$ | 1,885,244 | $ | 1,732,106 | $ | 1,641,675 | $ | 1,486,778 | $ | 1,436,101 | ||||||||||
| Total Debt to Market Capitalization |
0.28:1 | 0.30:1 | 0.30:1 | 0.28:1 | 0.29:1 | |||||||||||||||
| Earnings to Fixed Charges(1) |
2.3 | x | 2.4 | x | 2.5 | x | 2.5 | x | 2.6 | x | ||||||||||
| Debt Service Coverage Ratio(2) |
3.3 | x | 3.5 | x | 3.6 | x | 3.4 | x | 3.6 | x | ||||||||||
| Dividend Data |
||||||||||||||||||||
| Total Dividends Paid |
$ | 15,558 | $ | 15,499 | $ | 14,659 | $ | 14,634 | $ | 13,812 | ||||||||||
| Common Dividend per Share |
$ | 0.3725 | $ | 0.3725 | $ | 0.3725 | $ | 0.3725 | $ | 0.3525 | ||||||||||
| Payout Ratio (FFO per share basis) |
73.6 | % | 68.8 | % | 73.3 | % | 74.5 | % | 71.9 | % | ||||||||||
| (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 plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized. |
| (2) | Debt service coverage ratio is computed by dividing earnings before interest income and expense, depreciation, amortization and gain on sale of real estate by interest expense and principal amortization. |
8
Washington Real Estate Investment Trust
Core Portfolio Net Operating Income (NOI) Growth & Rental Rate Growth
Q1 2004 vs. Q1 2003
Cash Basis
| Sector |
NOI Growth |
Rental Rate Growth |
||||
| Multifamily(1) |
-5.5 | % | 1.5 | % | ||
| Office Buildings |
-2.6 | % | 0.2 | % | ||
| Retail Centers |
2.9 | % | 3.7 | % | ||
| Industrial / Flex Properties |
3.2 | % | -0.7 | % | ||
| Overall Core Portfolio |
-1.2 | % | 0.9 | % | ||
GAAP Basis
| Sector |
NOI Growth |
Rental Rate Growth |
||||
| Multifamily(1) |
-5.7 | % | 1.4 | % | ||
| Office Buildings |
-2.1 | % | 0.1 | % | ||
| Retail Centers |
1.4 | % | 2.5 | % | ||
| Industrial / Flex Properties |
3.6 | % | -1.0 | % | ||
| Overall Core Portfolio |
-1.2 | % | 0.6 | % | ||
| (1) | NOI growth for Multifamily and Core Porfolio for Q1 2004 would be as follows without the impact of the 21 HUD units and 4 additional units off the market at The Ashby at McLean for complete renovation. After renovation, the former HUD units will be leased at market rates. |
| Cash Basis |
|||
| Multifamily |
-5.4 | % | |
| Overall Core Portfolio |
-1.2 | % | |
| GAAP Basis |
|||
| Multifamily |
-5.6 | % | |
| Overall Core Portfolio |
-1.2 | % | |
9
Washington Real Estate Investment Trust
Core Portfolio Net Operating Income (NOI)
(In Thousands)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Net income |
$ | 11,302 | $ | 11,214 | ||||
| Real estate depreciation and amortization |
9,872 | 8,073 | ||||||
| Funds From Operations |
21,174 | 19,287 | ||||||
| Add: |
||||||||
| General and administrative |
1,229 | 1,132 | ||||||
| Interest expense |
8,575 | 7,047 | ||||||
| Less: |
||||||||
| NOI for non-core properties(1) |
(4,091 | ) | (204 | ) | ||||
| Other income |
(65 | ) | (108 | ) | ||||
| Core portfolio NOI, GAAP Basis |
26,822 | 27,154 | ||||||
| Straight-line revenue, net for core properties |
(321 | ) | (309 | ) | ||||
| Effect of SFAS 141 |
20 | — | ||||||
| Core portfolio NOI, Cash Basis |
$ | 26,521 | $ | 26,845 | ||||
| Core portfolio NOI by segment: |
||||||||
| GAAP Basis: |
||||||||
| Multifamily |
$ | 4,169 | $ | 4,421 | ||||
| Office Buildings |
13,345 | 13,638 | ||||||
| Retail Centers |
5,277 | 5,206 | ||||||
| Industrial/Flex |
4,031 | 3,889 | ||||||
| $ | 26,822 | $ | 27,154 | |||||
| Cash Basis: |
||||||||
| Multifamily |
$ | 4,175 | $ | 4,420 | ||||
| Office Buildings |
13,158 | 13,506 | ||||||
| Retail Centers |
5,194 | 5,048 | ||||||
| Industrial/Flex |
3,994 | 3,871 | ||||||
| $ | 26,521 | $ | 26,845 | |||||
| (1) | Non-core properties for Q1 2004 and Q1 2003 were Fullerton Industrial Center, 718 Jefferson Street, 1776 G Street, Prosperity Medical Center and 8880 Gorman Road. |
10
Washington Real Estate Investment Trust
Core Portfolio & Overall Occupancy Levels by Sector
Q1 2004 vs. Q1 2003
GAAP Basis
| Core Portfolio |
All Properties |
|||||||||||
| Sector |
1st QTR 2004 |
1st QTR 2003 |
1st QTR 2004 |
1st QTR 2003 |
||||||||
| Multifamily (1) |
88.6 | % | 90.9 | % | 88.6 | % | 90.9 | % | ||||
| Office Buildings |
86.7 | % | 87.1 | % | 89.1 | % | 87.1 | % | ||||
| Retail Centers |
94.4 | % | 96.1 | % | 94.4 | % | 96.1 | % | ||||
| Industrial / Flex Properties |
91.2 | % | 87.7 | % | 91.5 | % | 88.2 | % | ||||
| Overall Portfolio(2) |
88.8 | % | 89.2 | % | 90.0 | % | 89.3 | % | ||||
| (1) | Multifamily occupancy at 3/31/04 for the Core Portfolio and All Properties would be 89.9% without the 21 HUD units and 4 additional units at The Ashby at McLean off the market for complete renovation. |
| (2) | Overall Portfolio occupancy at 3/31/04 for the Core Portfolio and All Properties would be 89.1% and 90.3%, respectively, without the impact of the 21 HUD units and 4 additional units at The Ashby at McLean off the market for complete renovation. |
11
Washington Real Estate Investment Trust
Schedule of Properties
March 31, 2004
| PROPERTIES |
LOCATION |
YEAR ACQUIRED |
YEAR CONSTRUCTED |
NET RENTABLE SQUARE FEET | ||||
| Office Buildings |
||||||||
| 1901 Pennsylvania Avenue |
Washington, DC | 1977 | 1960 | 97,000 | ||||
| 51 Monroe Street |
Rockville, MD | 1979 | 1975 | 210,000 | ||||
| 7700 Leesburg Pike |
Falls Church, VA | 1990 | 1976 | 147,000 | ||||
| 515 King Street |
Alexandria, VA | 1992 | 1966 | 78,000 | ||||
| The Lexington Building |
Rockville, MD | 1993 | 1970 | 46,000 | ||||
| The Saratoga Building |
Rockville, MD | 1993 | 1977 | 59,000 | ||||
| Brandywine Center |
Rockville, MD | 1993 | 1969 | 35,000 | ||||
| Tycon Plaza II |
Vienna, VA | 1994 | 1981 | 127,000 | ||||
| Tycon Plaza III |
Vienna, VA | 1994 | 1978 | 151,000 | ||||
| 6110 Executive Boulevard |
Rockville, MD | 1995 | 1971 | 199,000 | ||||
| 1220 19th Street |
Washington, DC | 1995 | 1976 | 102,000 | ||||
| Maryland Trade Center I |
Greenbelt, MD | 1996 | 1981 | 190,000 | ||||
| Maryland Trade Center II |
Greenbelt, MD | 1996 | 1984 | 158,000 | ||||
| 1600 Wilson Boulevard |
Arlington, VA | 1997 | 1973 | 166,000 | ||||
| 7900 Westpark Drive |
McLean, VA | 1997 | 1972/1986/19991 | 521,000 | ||||
| 8230 Boone Boulevard |
Vienna, VA | 1998 | 1981 | 58,000 | ||||
| Woodburn Medical Park I |
Annandale, VA | 1998 | 1984 | 71,000 | ||||
| Woodburn Medical Park II |
Annandale, VA | 1998 | 1988 | 96,000 | ||||
| 600 Jefferson Plaza |
Rockville, MD | 1999 | 1985 | 115,000 | ||||
| 1700 Research Boulevard |
Rockville, MD | 1999 | 1982 | 103,000 | ||||
| Parklawn Plaza |
Rockville, MD | 1999 | 1986 | 40,000 | ||||
| Wayne Plaza |
Silver Spring, MD | 2000 | 1970 | 91,000 | ||||
| Courthouse Square |
Alexandria, VA | 2000 | 1979 | 113,000 | ||||
| One Central Plaza |
Rockville, MD | 2001 | 1974 | 267,000 | ||||
| The Atrium Building |
Rockville, MD | 2002 | 1980 | 81,000 | ||||
| 1776 G Street |
Washington, DC | 2003 | 1979 | 262,000 | ||||
| Prosperity Medical Center I |
Merrifield, VA | 2003 | 2000 | 92,000 | ||||
| Prosperity Medical Center II |
Merrifield, VA | 2003 | 2001 | 88,000 | ||||
| Prosperity Medical Center III |
Merrifield, VA | 2003 | 2002 | 75,000 | ||||
| Subtotal |
3,838,000 | |||||||
| Retail Centers |
||||||||
| Takoma Park |
Takoma Park, MD | 1963 | 1962 | 51,000 | ||||
| Westminster |
Westminster, MD | 1972 | 1969 | 146,000 | ||||
| Concord Centre |
Springfield, VA | 1973 | 1960 | 76,000 | ||||
| Wheaton Park |
Wheaton, MD | 1977 | 1967 | 72,000 | ||||
| Bradlee |
Alexandria, VA | 1984 | 1955 | 168,000 | ||||
| Chevy Chase Metro Plaza |
Washington, DC | 1985 | 1975 | 50,000 | ||||
| Montgomery Village Center |
Gaithersburg, MD | 1992 | 1969 | 198,000 | ||||
| Shoppes of Foxchase |
Alexandria, VA | 1994 | 1960 | 128,000 | ||||
| Frederick County Square |
Frederick, MD | 1995 | 1973 | 227,000 | ||||
| 800 S. Washington Street2 |
Alexandria, VA | 1998/2003 | 1955/1959 | 45,000 | ||||
| 1620 Wilson Boulevard |
Arlington, VA | 2002 | 1959 | 5,000 | ||||
| Centre at Hagerstown |
Hagerstown, MD | 2002 | 2000 | 334,000 | ||||
| Subtotal |
1,500,000 | |||||||
| 1 | A 49,000 square foot addition to 7900 Westpark Drive was completed in September 1999. |
| 2 | South Washington Street includes 718 Jefferson Street, acquired in May 2003 to complete the ownership of the entire block of 800 S. Washington Street. The net rentable square feet reduction from 12/31/03 is due to space taken off market for development of residential units. |
12
Washington Real Estate Investment Trust
Schedule of Properties (Cont.)
March 31, 2004
| PROPERTIES |
LOCATION |
YEAR ACQUIRED |
YEAR CONSTRUCTED |
NET RENTABLE* SQUARE FEET | ||||
| Multifamily Buildings / # units |
||||||||
| 3801 Connecticut Avenue / 307 |
Washington, DC | 1963 | 1951 | 177,000 | ||||
| Roosevelt Towers / 190 |
Falls Church, VA | 1965 | 1964 | 168,000 | ||||
| Country Club Towers / 227 |
Arlington, VA | 1969 | 1965 | 159,000 | ||||
| Park Adams / 200 |
Arlington, VA | 1969 | 1959 | 172,000 | ||||
| Munson Hill Towers / 279 |
Falls Church, VA | 1970 | 1963 | 259,000 | ||||
| The Ashby at McLean / 250 |
McLean, VA | 1996 | 1982 | 244,000 | ||||
| Walker House Apartments / 212 3 |
Gaithersburg, MD | 1996 | 1971/2003 | 154,000 | ||||
| Bethesda Hills Apartments / 194 |
Bethesda, MD | 1997 | 1986 | 226,000 | ||||
| Avondale / 236 |
Laurel, MD | 1999 | 1987 | 170,000 | ||||
| Subtotal (2,095 units) |
1,729,000 | |||||||
| Industrial Distribution / Flex Properties |
||||||||
| Fullerton Business Center |
Springfield, VA | 1985 | 1980 | 104,000 | ||||
| Pepsi-Cola Distribution Center |
Forestville, MD | 1987 | 1971 | 69,000 | ||||
| Charleston Business Center |
Rockville, MD | 1993 | 1973 | 85,000 | ||||
| Tech 100 Industrial Park |
Elkridge, MD | 1995 | 1990 | 167,000 | ||||
| Crossroads Distribution Center |
Elkridge, MD | 1995 | 1987 | 85,000 | ||||
| The Alban Business Center |
Springfield, VA | 1996 | 1981/1982 | 87,000 | ||||
| The Earhart Building |
Chantilly, VA | 1996 | 1987 | 90,000 | ||||
| Ammendale Technology Park I |
Beltsville, MD | 1997 | 1985 | 167,000 | ||||
| Ammendale Technology Park II |
Beltsville, MD | 1997 | 1986 | 108,000 | ||||
| Pickett Industrial Park |
Alexandria, VA | 1997 | 1973 | 246,000 | ||||
| Northern Virginia Industrial Park |
Lorton, VA | 1998 | 1968/1991 | 788,000 | ||||
| 8900 Telegraph Road |
Lorton, VA | 1998 | 1985 | 32,000 | ||||
| Dulles South IV |
Chantilly, VA | 1999 | 1988 | 83,000 | ||||
| Sully Square |
Chantilly, VA | 1999 | 1986 | 95,000 | ||||
| Amvax |
Beltsville, MD | 1999 | 1986 | 31,000 | ||||
| Sullyfield Center |
Chantilly, VA | 2001 | 1985 | 245,000 | ||||
| Fullerton Industrial Center |
Springfield, VA | 2003 | 1980 | 137,000 | ||||
| 8880 Gorman Road |
Laurel, MD | 2004 | 1980 | 141,000 | ||||
| Subtotal |
2,760,000 | |||||||
| TOTAL |
9,827,000 | |||||||
| 3 | A 16 unit addition referred to as The Gardens at Walker House was completed in October 2003. |
| * | Multifamily buildings are presented in gross square feet. |
13
Washington Real Estate Investment Trust
Commercial Leasing Summary
Three months ended March 31, 2004
| 1st Quarter 2004 |
||||
| Gross Leasing Square Footage |
||||
| Office Buildings |
201,249 | |||
| Retail Centers |
31,175 | |||
| Industrial Centers |
89,779 | |||
| Total |
322,203 | |||
| Weighted Average Term (yrs) |
||||
| Office Buildings |
5.3 | |||
| Retail Centers |
3.0 | |||
| Industrial Centers |
2.0 | |||
| Total |
4.1 | |||
| GAAP (1) |
CASH |
|||||||
| Rental Rate Increases: |
||||||||
| Rate on expiring leases |
||||||||
| Office Buildings |
$ | 26.07 | $ | 26.81 | ||||
| Retail Centers |
$ | 19.95 | $ | 20.52 | ||||
| Industrial Centers |
$ | 8.51 | $ | 8.72 | ||||
| Total |
$ | 20.58 | $ | 21.16 | ||||
| Rate on new and renewal leases |
||||||||
| Office Buildings |
$ | 25.97 | $ | 24.42 | ||||
| Retail Centers |
$ | 22.86 | $ | 22.26 | ||||
| Industrial Centers |
$ | 7.92 | $ | 7.76 | ||||
| Total |
$ | 20.64 | $ | 19.57 | ||||
| % Increase |
||||||||
| Office Buildings |
-0.38 | % | -8.91 | % | ||||
| Retail Centers |
14.59 | % | 8.48 | % | ||||
| Industrial Centers |
-6.93 | % | -11.01 | % | ||||
| Total |
0.29 | % | -7.51 | % | ||||
| Total Dollars |
Dollars per Square Foot |
|||||||
| Tenant Improvements and Leasing Costs |
||||||||
| Office Buildings |
$ | 2,678,886 | $ | 13.31 | ||||
| Retail Centers |
$ | 39,613 | $ | 1.27 | ||||
| Industrial Centers |
$ | 56,905 | $ | 0.63 | ||||
| Total |
$ | 2,775,404 | $ | 8.61 | ||||
| (1) | GAAP rates are presented on a straight-line basis, meaning they reflect subsequent years’ rental rate escalations. |
14
Washington Real Estate Investment Trust
10 Largest Tenants - Based on Annualized Base Rent
March 31, 2004
| 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 |
|||||||
| World Bank |
1 | 33 | 4.40 | % | 149,284 | 2.07 | % | |||||
| Sunrise Senior Living, Inc. |
1 | 114 | 3.45 | % | 180,066 | 2.49 | % | |||||
| General Services Administration |
6 | 21 | 2.39 | % | 250,349 | 3.47 | % | |||||
| Sun Microsystems, Inc. |
1 | 33 | 2.22 | % | 110,184 | 1.53 | % | |||||
| Xerox Corporation (1) |
1 | 5 | 2.22 | % | 90,994 | 1.26 | % | |||||
| SunTrust Bank (2) |
4 | 11 | 2.21 | % | 104,290 | 1.44 | % | |||||
| INOVA Health Care Services |
4 | 72 | 1.96 | % | 83,631 | 1.16 | % | |||||
| Northrop Grumman |
3 | 11 | 1.89 | % | 116,607 | 1.61 | % | |||||
| International Monetary Fund |
1 | 21 | 1.75 | % | 59,146 | 0.82 | % | |||||
| George Washington University |
2 | 51 | 1.52 | % | 66,066 | 0.91 | % | |||||
| Total/Weighted Average |
40 | 24.01 | % | 1,210,617 | 16.76 | % | ||||||
| (1) | Xerox will vacate 45,169 square feet on 8/31/04. |
| (2) | SunTrust will vacate 53,345 square feet on 11/30/04. |
15
Washington Real Estate Investment Trust
Lease Expirations as of
March 31, 2004
| Year |
Number of Leases |
Rentable Square Feet |
Percent of Rentable Square Feet |
Annualized Rent * |
Average Rental Rate |
Percent of Annualized Rent * |
||||||||||
| Office: |
||||||||||||||||
| 2004 |
91 | 666,748 | 20.5 | % | $ | 17,581,598 | $ | 26.37 | 19.7 | % | ||||||
| 2005 |
119 | 468,440 | 14.4 | % | 14,526,576 | 31.01 | 16.3 | % | ||||||||
| 2006 |
114 | 481,946 | 14.8 | % | 12,555,933 | 26.05 | 14.1 | % | ||||||||
| 2007 |
58 | 264,686 | 8.1 | % | 6,795,359 | 25.67 | 7.6 | % | ||||||||
| 2008 |
68 | 353,407 | 10.9 | % | 9,828,816 | 27.81 | 11.0 | % | ||||||||
| 2009 and thereafter |
136 | 1,016,544 | 31.3 | % | 28,003,715 | 27.55 | 31.4 | % | ||||||||
| 586 | 3,251,771 | 100.0 | % | $ | 89,291,997 | $ | 27.46 | 100.0 | % | |||||||
| Retail: |
||||||||||||||||
| 2004 |
31 | 113,351 | 7.9 | % | $ | 1,645,704 | $ | 14.52 | 7.5 | % | ||||||
| 2005 |
43 | 199,862 | 14.0 | % | 3,452,756 | 17.28 | 15.6 | % | ||||||||
| 2006 |
46 | 148,896 | 10.4 | % | 2,845,507 | 19.11 | 12.9 | % | ||||||||
| 2007 |
42 | 135,358 | 9.5 | % | 2,987,038 | 22.07 | 13.5 | % | ||||||||
| 2008 |
25 | 168,845 | 11.8 | % | 1,480,638 | 8.77 | 6.7 | % | ||||||||
| 2009 and thereafter |
77 | 663,878 | 46.4 | % | 9,658,567 | 14.55 | 43.8 | % | ||||||||
| 264 | 1,430,190 | 100.0 | % | $ | 22,070,211 | $ | 15.43 | 100.0 | % | |||||||
| Industrial: |
||||||||||||||||
| 2004 |
44 | 438,865 | 17.7 | % | $ | 3,239,391 | $ | 7.38 | 16.6 | % | ||||||
| 2005 |
52 | 585,687 | 23.7 | % | 4,306,619 | 7.35 | 22.1 | % | ||||||||
| 2006 |
50 | 509,773 | 20.6 | % | 4,635,897 | 9.09 | 23.7 | % | ||||||||
| 2007 |
17 | 214,361 | 8.7 | % | 1,643,033 | 7.66 | 8.4 | % | ||||||||
| 2008 |
24 | 271,220 | 11.0 | % | 2,274,942 | 8.39 | 11.7 | % | ||||||||
| 2009 and thereafter |
21 | 455,454 | 18.4 | % | 3,426,838 | 7.52 | 17.5 | % | ||||||||
| 208 | 2,475,360 | 100.0 | % | $ | 19,526,720 | $ | 7.89 | 100.0 | % | |||||||
| Total: |
||||||||||||||||
| 2004 |
166 | 1,218,964 | 17.0 | % | $ | 22,466,693 | $ | 18.43 | 17.2 | % | ||||||
| 2005 |
214 | 1,253,989 | 17.5 | % | 22,285,952 | 17.77 | 17.0 | % | ||||||||
| 2006 |
210 | 1,140,615 | 15.9 | % | 20,037,337 | 17.57 | 15.3 | % | ||||||||
| 2007 |
117 | 614,405 | 8.6 | % | 11,425,430 | 18.60 | 8.7 | % | ||||||||
| 2008 |
117 | 793,472 | 11.1 | % | 13,584,395 | 17.12 | 10.4 | % | ||||||||
| 2009 and thereafter |
234 | 2,135,876 | 29.8 | % | 41,089,120 | 19.24 | 31.4 | % | ||||||||
| 1,058 | 7,157,321 | 100.0 | % | $ | 130,888,927 | $ | 18.29 | 100.0 | % | |||||||
| * | Annualized Rent is as of March 31, 2004 rental revenue (cash basis) multiplied by 12. |
16
Washington Real Estate Investment Trust
2004 Acquisition and Development Summary
($’s in thousands)
Acquisition Summary
| Acquisition Date |
Square Feet |
Occupancy Percentage at Acquisition |
March 31, 2004 Leased Percentage |
Investment | |||||||||
| 8880 Gorman Road |
03/10/04 | 140,700 | 100 | % | 100 | % | $ | 11,500 | |||||
Development Summary
| Property and Location |
Total Rentable Square Feet or # of Units |
Percentage Leased or Committed |
Anticipated Total Cost |
Cost to Date |
Anticipated Construction Completion Date | |||||||||||
| Redevelopment |
||||||||||||||||
| Westminster Shopping Center (1) Westminster, MD |
37,650 sq ft. | 100 | % | $ | 3,700 | $ | 978 | 4Q 04 | ||||||||
| Development |
||||||||||||||||
| WRIT Rosslyn Center (2) Arlington, VA |
224 units & 6,500 sq ft. retail |
0 | % | $ | 56,100 | $ | 4,875 | (4) | 2Q 06 | |||||||
| South Washington Street (3) Alexandria, VA |
75 units & 3,000 sq ft. retail |
0 | % | $ | 17,500 | $ | 1,917 | (4) | 1Q 06 | |||||||
| (1) | Redevelopment in conjunction with a lease executed in May 2003 with a national food chain. |
| (2) | WRIT Rosslyn Center is a planned 224 unit multifamily property in the early development stages. 1620 Wilson Boulevard was acquired in conjunction with the overall development plan for WRIT Rosslyn Center. |
| (3) | 718 E. Jefferson Street was acquired to complete our ownership of the entire block of 800 S. Washington Street. The surface parking lot on this block is now in the preliminary stages of development. We refer to this development project as South Washington Street. |
| (4) | Includes land cost. |
17
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|
18
Washington Real Estate Investment Trust
Reporting Definitions
March 31, 2004
Annualized base rent (ABR) is calculated as monthly base rent (cash basis) per the lease, as of the reporting period, multiplied by 12.
Debt to total market capitalization is total debt from the balance sheet divided by the sum of total debt from the balance sheet plus the market value of shares outstanding at the end of the period.
EBITDA is earnings before interest, taxes, depreciation and amortization.
Ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized.
Debt service coverage ratio is computed by dividing earnings before interest income and expense, depreciation, amortization and gain on sale of real estate by interest expense and principal amortization.
Funds from operations (FFO) - The National Association of Real Estate Investment Trusts, Inc. (NAREIT) defines FFO (April, 2002 White Paper) as net income (computed in accordance with generally accepted accounting principles (GAAP)) excluding gains (or losses) from sales of property plus real estate depreciation and amortization.
Funds Available for Distribution (FAD) is calculated by subtracting from FFO recurring expenditures, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream and straight line rents, then adding non-real estate depreciation and amortization.
Recurring capital expenditures represents 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 to 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.
Core portfolio properties include all properties that were owned for the entirety of the current and prior year reporting periods.
Core portfolio net operating income (NOI) growth is the change in the NOI of the core portfolio properties from the prior reporting period to the current reporting period.
19
